Today’s focus is on railway stocks: As a result of increased order activity, railway stocks are rising. Positive earnings releases in May increased investor confidence and market interest in companies including RailTel and RITES, which saw significant rises.
Focus on railway stocks:
Since tensions between India and Pakistan increased, Dalal Street investors have been interested in defense stocks, which has brought these domestic companies back into the spotlight and led to powerful rallies akin to those that occurred in the first half of 2024.
The majority of the segment’s companies saw significant gains, and railway stocks joined the rally as well. As investors reacted favorably to consistent order wins and strong performance in the March quarter, shares of Rail Vikas Nigam, RITES, BEML, Ircon International, RailTel Corporation of India, IRCTC, and Indian Railway Finance Corporation produced returns of up to 30% in May.
Prior to this, railway stocks went through a protracted bull run from May 2023 to July 2024, which caused their values to reach unsupportable heights. Sharp losses from record highs were the result of investors pulling out of the segment due to this and a slowdown in order inflows.
Alongside the ongoing strength in defense stocks, the current increase in order flow has rekindled investor interest and drawn investors back into the railway sector.
Among the railroad stocks enjoying the May rise are RailTel and Rites.
RailTel Corporation of India’s shares saw its largest monthly increase since January 2024 in May, rising from ₹312 to ₹384, a 30% gain so far. In early May, North Central Railway sent a ₹227.5 million work order to the infrastructure company.
The company posted a net profit of ₹113.4 crore for the March quarter, up from ₹77.53 crore in the same period last year. This increase reflects improved commercial momentum and solid operational execution. In keeping with its 25–30% profit growth forecast, RailTel achieved a 27.6% profit rise in FY25.
With strong order inflows of ₹31.5 billion in FY25, the Navratna business has reaffirmed its outlook for revenue and profit growth of 25–30% for FY26.
The share price of RITES, a well-known engineering and consulting firm for transport infrastructure, increased by 27% in May. The company’s order book reached a record high of ₹8,877 crore as of March 31, 2025, after securing over 150 orders (including extensions) worth over ₹1,418 crore in Q4FY25. Its net profit increased 6.2% year over year to ₹141 crore in Q4.
Consistent order wins have sent Ircon International’s stock up 23% so far in May. Kerala State IT Infrastructure placed an order for ₹1.87 billion with the company on May 6. It had obtained a contract of ₹458.14 crore for civil works in the Tato-I Hydro Electric Project in Arunachal Pradesh from North Eastern Electric Power Corporation.
Ircon’s allocated contract amount was enhanced by ₹59.44 crore by Northeast Frontier Railway in late April.
In May, Rail Vikas Nigam (RVNL) shares saw a 17% gain thanks to consistent order wins from Indian Railways. The business received a ₹116 crore order from Central Railway on Friday. It was the lowest bidder for a Southern Railway contract worth ₹143 crore in mid-April.
Amid several encouraging developments, the share price of Indian Railway Finance Corporation (IRFC) also surged 12% in May. The government gave it permission on May 15 to issue deep-discount bonds, a corporate financing instrument that is becoming more and more popular among state-owned businesses, in order to raise up to ₹100 billion.
The lowest bidder to give NTPC a ₹50 billion loan in late April was IRFC. It posted a net profit of ₹1,682 crore for the March quarter, down from ₹6,723 crore for the same period last year.
In May, other PSU stocks with a railway connection, such BEML and IRCTC, also saw increases of 16% and 8%, respectively.
