About Indian Railway Sector
India’s railway network is an undeniable symbol of strength, powering the country’s economy with unwavering vitality. Ranked fourth globally, behind the US, China, and Russia, the extensive Indian railways network spans almost the entire nation, serving as a lifeline for economic progress. Under the governance of the Railways Board, this infrastructure holds the exclusive rights to provide rail services across the country. With their cost-effectiveness and operational efficiency, railways remain the preferred mode of transportation for millions of Indians, especially for long-distance journeys.
Marching towards progress, the Indian Railways boasts an extensive network covering 68,043 kilometers of routes and stretching across 102,831 kilometers of tracks. Employing over 1.4 million people, it stands as India’s largest employer, wielding an immense influence on numerous businesses.
Let us delve into the realm of top railway stocks in India, which have recently surged after Finance Minister Nirmala Sitharaman announced an unprecedented capital expenditure outlay for the Indian Railways in the Union Budget 2023. The allocation of an impressive INR 2.40 lakh crore for the Indian Railways during the fiscal year 2023-24, nine times greater than the previous fiscal year, has set the stage for substantial growth and development.
What Makes Railway Stocks Irresistible?
With the population continually on the rise and income levels ascending, the demand for railway services remains unwavering. Moreover, the vast expanse of the Indian railway network ensures that public and private businesses engaging in lucrative railway deals, represented by Indian railway stocks, will continue to thrive well into the future.
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Top Railway Stocks in India 2023
Now, let us embark on a journey through the realm of India’s leading railway companies, where we shall evaluate their prominence based on market capitalization.
#1 Indian Railway Catering and Tourism Corporation (IRCTC): Biggest Among Top Railway Stocks in India
As the crown jewel among India’s railway stocks, the Indian Railway Catering and Tourism Corporation (IRCTC) stands as a subsidiary of the Indian Railways. Established in 1999 and headquartered in New Delhi, IRCTC assumes responsibility for catering, tourism, and online ticketing operations. Operating an extensive network of catering units, including base kitchens, mobile catering units, and pantry cars, IRCTC ensures passengers enjoy high-quality meals during their train journeys.
They also manage food stalls, restaurants, and luxury tourist trains such as the Palace on Wheels, Maharajas’ Express, and Buddhist Circuit Tourist Train. With a sales compound annual growth rate (CAGR) of 4.34% over the last five years, IRCTC shines as one of best railway stocks in India.
#2 Indian Railway Finance Corporation (IRFC) – Among the Best Railway Stocks in India
Indian Railway Finance Corporation (IRFC) is a financial powerhouse dedicated to supporting the expansion and modernization of Indian Railways. Established in 1986 under the Ministry of Railway (MoR), IRFC operates as a vital arm of the railway sector, fueling its growth through strategic financing solutions.
With a track record of excellence spanning over three decades, IRFC plays a pivotal role in bridging the financial gap by borrowing funds from the market. These funds are then utilized to acquire and create essential railway assets, which are subsequently leased out to Indian Railways. Through this innovative approach, IRFC ensures a steady influx of capital to support the railway’s annual capital expenditure.
Over the years, IRFC has established itself as a non-banking financial company (NBFC) par excellence, raising funds through diverse financial instruments such as bonds, loans, and lease financing. Its cumulative funding to the rail sector has surpassed an impressive INR 5.04 lakh crore as of March 31, 2022. Operating in a dynamic market, IRFC has demonstrated remarkable growth, with revenues soaring at a rapid compound annual growth rate (CAGR) of 17.5% over the past five years.
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#3 Container Corporation of India Limited (CONCOR)
Container Corporation of India Limited (CONCOR) is the undisputed leader in India’s logistics industry. As a PSU owned by the Indian government, CONCOR has been instrumental in transforming the nation’s cargo transportation landscape since its establishment in 1988.
Headquartered in New Delhi, CONCOR’s reach extends far and wide, covering coastal and inland locations. The company offers a comprehensive suite of services, including containerized cargo transportation, handling, storage, and value-added solutions. Its commitment to cost-effectiveness, reliability, and efficiency has made it the preferred choice for customers seeking exceptional logistics services.
Through a sales CAGR of 5.06% over the past five years, CONCOR has consistently bolstered its revenues, affirming its status as an industry frontrunner. In the financial year 2022, CONCOR achieved a remarkable return on equity (ROE) of 10% and return on capital employed (ROCE) of 13%.
#4 Rail Vikas Nigam Limited (RVNL) – Transforming India’s Rail Infrastructure
Rail Vikas Nigam Limited (RVNL), a dynamic enterprise incorporated by the Government of India in 2003, has emerged as a pivotal player in revolutionizing India’s rail infrastructure. Entrusted with implementing a diverse range of rail projects assigned by the Ministry of Railways, RVNL has been instrumental in driving the expansion, electrification, and modernization of the nation’s railway network.
With a portfolio of 195 projects as of March 2022, RVNL has showcased its commendable execution capabilities. Having already completed 120 projects, RVNL has 72 projects currently under implementation, with three projects awaiting sanction.
RVNL’s growth trajectory is underscored by its impressive financial performance. Boasting a rapid CAGR of 26.8% in revenues over the past five years, RVNL has consistently generated rising net profits. Additionally, with a dividend yield of over 1.41%, RVNL stands among the top Railway Stocks in India.
#5 Rail India Technical and Economic Service Limited (RITES)
Established in 1974, RITES is a public sector enterprise and one of the top railway companies in India. It is a leading player in the transport consultancy and engineering sector and has diversified services and geographical reach. The company is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia, and Indonesia). At present levels, the stock offers a high dividend yield of over 4.20%. The company’s revenues have grown at a CAGR of 14.5% over the last 5 years.
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#6 Ircon International Limited (IRCON)
Incorporated in 1976, Ircon International is an engineering and construction company headquartered in New Delhi, India. It is a public sector enterprise owned by the Government of India.
Ircon’s expertise spans multiple sectors, including railways, highways, bridges, tunnels, airports, metro systems, and buildings. With an impressive presence both within India and across 21 countries worldwide, the company has showcased its ability to execute complex projects with unparalleled finesse.
In the railway sector, Ircon specializes in the construction of new railway lines, railway electrification, signaling and telecommunication systems, and other related infrastructure projects. They have undertaken significant railway projects in India, such as the construction of dedicated freight corridors and high-speed rail corridors. The company’s revenues have grown at a rapid CAGR of 19.2% over the last 5 years. It has seen a consistent rise in net profits too.
#7 Bharat Earth Movers Limited (BEML)
Bharat Earth Movers (BEML) was established in May 1964 as a PSU for the production of Rail Coaches for the Metro & Spare Parts and Mining Equipment at its Bangalore complex. The company is listed on both exchanges (BSE & NSE) with the government of India and is held by Financial Institutions, Foreign Institutional Investors, Banks, Public, and Employees.
BEML plays a pivotal role and serves India’s core sectors like Defence, Rail, Power, Mining, and Infrastructure. The company started in 1965 with a modest turnover of INR 5 crore but achieved its highest-ever turnover of INR 4,143 crore in FY 2022.
#8 Titagarh Wagons Limited
Titagarh Wagons is an Indian engineering company primarily engaged in the private sector in the manufacturing of railway wagons, steel castings, and heavy engineering products. The company was founded in 1997 and is headquartered in Kolkata, West Bengal, India.
Titagarh Wagons specializes in the design, development, and production of a wide range of railway wagons, including freight wagons, tank wagons, special-purpose wagons, and metro coaches. Apart from railway wagons, Titagarh Wagons also manufactures steel castings for applications in sectors such as railways, automobiles, power plants, and general engineering.
It has a widespread presence in India with manufacturing facilities located in West Bengal, Uttarakhand, and Maharashtra. Titagarh Wagons is listed on NSE and BSE and trades at a high PE of 59.5. The company’s revenues have grown at a CAGR of 2.42% over the last 5 years. It has seen a consistent rise in net profits too.
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#9 RailTel Corporation of India Ltd
Incorporated in 2000, RailTel Corporation of India is a Mini Ratna public sector enterprise under the Ministry of Railways. RailTel provides a wide range of telecom and networking services to the Indian Railways, as well as to other government organizations and private clients. Their services include high-speed internet, virtual private network (VPN), leased line, video conferencing, and data center services. They also provide network management services, such as network operations center (NOC) and security operations center (SOC) services.
The company has a vast optic fiber network spread across India, covering over 61,000+ route kilometers of fiber and connecting more than 6,108+ railway stations. RailTel also provides various passenger services including content-on-demand services and Wi-Fi across major railway stations in India. It trades at a high PE of 23.6. The share price has seen an increase of 30.70% in the last 12 months, making it one of the best performing railway stocks.
#10 Texmaco Rail & Engineering Ltd
Texmaco Rail & Engineering is an Indian engineering company specializing in the manufacturing of railway rolling stock and infrastructure. The company was established in 1939 and is headquartered in Kolkata, West Bengal, India.
Texmaco Rail & Engineering offers a wide range of products and services related to the railway industry. They manufacture and supply railway wagons, coaches, locomotives, and various components such as bogies, couplers, and underframes. They cater to both domestic and international markets and have a strong presence in India as well as several countries across the globe.
Texmaco has a dedicated research and development division that focuses on innovation and technological advancements in the railway sector. The company is part of Saroj Poddar-led Adventz Group, a conglomerate with diverse business interests including agrochemicals, engineering, and real estate. The share price has seen an increase of 17.97% in the last 12 months.
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Top Railway Stocks in India by Market Capitalization March 2023
|Company Name||Industry||Type||Market Cap (cr.)||P/E Ratio||Net Income (cr.)||5 Year Sales CAGR (%)|
|IRCON||Engineering & Construction||Public||7,744||10.30||751.0||19.20|
The railway industry is expected to grow tremendously in the coming years and may lead to more opportunities for businesses. The railway sector in India is at the cusp of a revolution, whether it be the launch of high-speed trains or stake sales. The industry is poised for massive growth going forward. This shall result in more opportunities for the companies we covered in this article.
Top Railway Stocks in India FAQs
Which are the top railway stocks in India?
Some of the top railway stocks in India include companies such as IRCTC, IRFC, CONCOR, RVNL. These companies are actively involved in various aspects of the railway industry and are listed on the Indian stock exchanges.
What is the revenue of Railways in 2023?
Indian Railways has registered a record revenue of INR 2.40 lakh crore in the FY 2022-23.
Are railway stocks safe investment options?
Railway stocks, like any other investment, come with a certain level of risk. While railway companies in India are typically backed by government support and have a strong presence in the transportation sector, there are still factors that can impact their performance.
What are the long-term growth prospects of railway stocks in India?
The long-term growth prospects of railway stocks in India can be promising. With the government’s focus on modernization, capacity expansion, and infrastructure development, railway companies have the potential to benefit from these initiatives. However, it is essential to monitor industry trends, government policies, and the overall economic landscape to make informed investment decisions.