Railway shares such as Rail Vikas Nigam Ltd (RVNL), Titagarh Rail Systems Ltd, Ircon International Ltd, Indian Railway Finance Corporation Ltd (IRFC), RITES Ltd, Indian Railway Catering & Tourism Corporation Ltd (IRCTC), Railtel Corporation of India Ltd and Jupiter Wagons Ltd are in focus today, as stock investors eye higher budgetary sops in the Union Budget 2024 that is scheduled for Tuesday, July 23. Noting that higher capex is the key enabler for a pick-up in private capex, InCred Equities expects the government to focus on key infrastructure segments such as railway and metro rail, among others.
As far as investments in rail safety and speed is concerned, InCred expects expansion of the existing railway network, with a focus on safety. It believes that KAVACH safety-related capex is much needed in the current scenario, as no major announcement was made on this in the Interim Budget 2024. "Besides, it expects higher investment in infrastructure projects such as including metro rail and Namo Bharat, which it feels could be expanded to more cities," it said.
Care Ratings expects 12-15 per cent higher budgetary allocation at Rs 2.75 lakh crore. It sees augmentation of Vande Bharat Trains by 50-60 times; large investments in rolling stock, track construction, and railway safety. Besides, it sees the introduction of hybrid Annuity model for railways capex. PLI scheme for indigenous manufacturing of railway ancillary parts is possible, it said. Mehta Securities expects the Union Budget 2024 to be an extension of the Interim Budget itself, and believes there is further steam left in railway stocks space on the back of robust order books and improving earnings quality. In a big step in modernising rail mobility and connectivity, the FM in her interim Budget announced capital outlay for Railways at Rs 2.55 lakh crore, about nine times the outlay made in FY 2013-14. "The Finance Minister Nirmala Sitharaman in her speech also added that three major economic railway corridor programmes will be implemented. These projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity," Mehta Securities noted. InCred, meanwhile, expects a 5-10 per cent decline in the allocation for roads and railways. "While we expect a muted allocation in FY25F, there could be announcements for the next five years which provide the roadmap for the sector," it said.
Reliance Securities sees higher allocations towards railways, which could lead to increased infrastructure order conversions. That said, the brokerage is cautious of sectors such as railways and defence post the recent rally.