IRFC, RVNL, BEML, IRCON, CONCOR: Railway Budget 2025 expectations, stocks in focus

Railway Budget 2025: Come February 1, stock analysts are expecting up to Rs 3,00,000 crore in railway capex from the Finance Minister Nirmala Sitharaman and said IRCON International Ltd, Rail Vikas Nigam Ltd (RVNL), RITES Ltd, Texmaco Rail Container Corporation of India (CONCOR) and railway order-linked companies such as Larsen & Toubro Ltd and Siemens Ltd would be in focus over the next two sessions.   

A jump in capex could lift investor sentiment, as a dozen railway stocks have lost 19-51 per cent of their values from their 52-week high levels, amid concerns over growth.    

The biggest falls have been observed in shares of wagon makers Jupiter Wagons Ltd (51.44 per cent), Titagarh Railsystems Ltd (down 50.04 per cent) and Texmaco Rail & Engineering Ltd (down 38 per cent).

Ircon International Ltd, Oriental Rail Infrastructure Ltd, Railtel Corporation of India Ltd (RailTel), Rites Ltd have declined 38-44 per cent from their one-year highs. Container Corporation Of India Ltd, BEML Ltd, Rail Vikas Nigam Ltd, Indian Railway Catering And Tourism Corporation Ltd and Kernex Microsystems (India) Ltd have also fallen 19-38 per cent from their one-year high levels.

Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking expects the government to allocate higher funds for railway infrastructure, focusing on electrification, high-speed rail, dedicated freight corridors, and digital transformation. 

"Priority segments likely include Vande Bharat trains, station modernization, and green initiatives. Stocks to focus on include IRCON International, RITES Ltd, Texmaco Rail, and Container Corporation of India (CONCOR) for infrastructure and logistics. Companies like Siemens India and Sterling and Wilson Solar may benefit from electrification and renewable energy initiatives," Singh said.

This analyst asked investors should focus on firms involved in modernisation, sustainability, and freight logistics for growth opportunities.

"For FY2026, this is expected to increase further to around Rs 2.7–Rs 3 lakh crore, aligning with India’s long-term infrastructure development goals. Segment such as freight and logistics, passenger comfort, railway infrastructure and green railways may get prioritise this budget. Stocks such as IRCON International, RVNL, Larsen & Toubro and Indian Railway Finance Corporation Ltd," said Ajay Garg, CEO at SMC Global Securities

Manish Chowdhury, Head of Research at StoxBox said the government may announce 15-18 per cent increase in allocation for railways. In the 2024-25 Budget, a total of Rs 2,62,200 crore were allocated to the railway sector, emphasising passenger safety with the implementation of the Kavach anti-collision system and infrastructure development. 

"The Namo Bharat Corridor in Delhi represents a significant leap forward, helping to reduce congestion and pollution. To further enhance railway infrastructure, the budget is likely to include new orders for rolling stock, freight coaches, and wheels. Additionally, the government’s push towards the Make in India initiative could create new opportunities for railway equipment manufacturers. From a budget perspective, the outlook for the railway sector remains positive, with RVNL, BEML, and IRFC identified as top picks," Chowdhury said.

Amnish Aggarwal, Director - Institutional Research, PL Capital said the FY25 railway investments, 76 per cent spent in 9MFY25, focused on capacity enhancement. He sees continued investments in Vande Bharat trains, rolling stock upgrades, and Kavach ATCS systems (10,000 km target in 2 years) in the Budget 2025.

Trivesh D, COO Tradejini said one of the key priorities in the railways Budget will be enhancing safety features across the railway network. The Kavach system, an advanced train collision avoidance system, is likely to continue receiving significant funding, which could benefit sectors contributing to its development. Additionally, there is likely to be a focus on upgrading railway stations, introducing modern trains, and addressing congestion in the track network.

Puneet Singhania, Director at Master Trust Group also sees the Finance Minister Nirmala Sitharaman to allocate a record high capital expenditure for the railway sector with an increase of 15-20 per cent from previous budget allocation, bringing the total around Rs 3 lakh crores. 

"Key priorities are likely to include the expansion of Vande Bharat train services and the introduction of Vande Bharat Metro trains. Possible projects include boosting the Bullet Train project's budget, improving the KAVACH safety system, and incorporating artificial intelligence into tasks like ticketing. Freight transportation is expected to receive significant attention, with plans for a substantial wagon order and the development of Gati Shakti Multi Model Cargo Terminals to boost the railway’s share in the cargo market. Furthermore, the focus will be on modernization including the integration of artificial intelligence in operations.

Siddharth Oberoi, Founder and  Chief Investment Officer at Prudent Equity said railways will continue to be a top priority, as always, but with most stocks in the sector already trading at expensive to reasonable valuations, future returns will depend largely on strong on-the-ground execution. A significant re-rating of these stocks seems unlikely in the near future, he said.

Manish Bhandari, CEO and Portfolio Manager at Vallum Capital Advisors said 136 Vande Bharat trains are operational as of January 2025, providing faster and more comfortable travel options. 

Future Target includes 400 Vande Bharat trains by 2027, including sleeper versions for overnight travel. The introduction of Vande Metro services for suburban and short-distance routes is in progress, aimed at addressing urban connectivity challenges. "Hence, as the size and economies of scale kick in Rolling stocks, the products associated with this and their export will become a key theme," Bhandari said.

The Ministry of Railways plans to equip 10,000 train engines with armor protection systems and additionally operate on 5,000-5,500 kilometers of track annually over the next two years. The government is also integrating AI into operations like ticketing and monitoring track condition to improve efficiency and safety. The introduction of new Vande Bharat and Amrit Bharat trains is expected, alongside an expansion of the Amrit Bharat Station Yojana, a scheme aimed at modernizing 1,275 railway stations with enhanced passenger amenities and contemporary designs, anlaysts noted.