Best Railway Stocks in India 2024

Railways are a vital transportation system for millions of Indians, providing affordable and efficient travel. With a rich history spanning over 160 years, the Indian Railway share list has evolved to meet the growing needs of the rapidly developing economy. It recorded a revenue of Rs. 2.40 Lakh Cr. in FY 2022-23, reflecting 25% growth. The freight revenue also increased to Rs. 1.62 lakh Cr, rising 15%. All railway stocks are involved in various businesses, offering various investment opportunities. This demand has also boosted the IRCTC share of companies manufacturing railway components, making Indian railways a rich industry. Let us explore good railway stocks more in this blog. 

Everything About the Railway Sector

Indian railway is the fourth-largest globally, after the US, Russia, and China. The Railways Board oversees the smooth operation and development of railways. Currently, the Indian Railways has a track length of 126,366 kilometres and 7,335 stations. Significant progress has been made in track expansion, with 5,243 kilometres of new track laid in fiscal year 2022-23, marking the highest commissioning rate ever. The railways manage 13,523 passenger and 9,146 freight trains daily. In FY 2022-23, the railways transported 1,512 million tonnes of freight. This milestone highlights the robustness and efficiency of the railway network in facilitating cargo movement.

All Railway Stocks in India

Below are the listings of some of the best railway stocks in India listed in the table. 

Disclaimer: All the stock prices, market capitalisation, Current Market Price, 52-Week High, 52-Week Low, Market Capitalisation (in crores) mentioned above are accurate as of 9th July 2024. However, it's important to conduct thorough research before making any investment decisions in these stocks. 

Overview of Best Railway Stocks in India-

The Indian railway sector has several prominent companies offering investment opportunities. Let's get into the best railway stocks and their overview:

Indian Railway Catering Tourism Corporation Ltd (IRCTC)

IRCTC, a major player in India's railway system, offers catering and tourism services to passengers. It provides quality food options and facilitates tourism through package tours, hotel bookings, and e-ticketing.

• The company is almost debt-free.
• The profit growth of the company is at a healthy rate of 32.2 CAGR over the last 5 years.
• The company’s net profit has also increased to ₹1006 crores in FY 23.

Container Corporation of India Limited (CONCOR):

Container Corporation of India Limited, a Navratna PSU, is a significant player in India's trade ecosystem, focusing on containerised freight and international trade facilitation. It offers multi-modal logistics support for India's international and domestic trade.

• The current dividend payout of the company stands at 40.4%.
• The firm’s compounded sales growth for the last 5 Years is 4%.
• The stock price CAGR of the company over the last 3 years is 16%.

Indian Railway Finance Corporation Ltd (IRFC)

IRFC, the Indian Railways' financial arm, plays an important role in funding railway developments. It generates funds through capital markets and borrowings and covers the railways' Extra Budgetary Resources (EBR) requirements with competitive prices and conditions.

• The dividend payout of the company is currently 30.5%.
• The company’s operating profit was ₹ 6,439 in the last quarter of the financial year 2023-24.
• The return equity (ROE) of the company for the last 5 Years is 14%.

Rail Vikas Nigam Ltd (RVNL)

RVNL specialises in rail infrastructure projects like new lines and electrification. Its market cap is Rs. 512.71 billion. RVNL's involvement in critical railway projects underscores its importance in infrastructure development.

• The return on capital employed (ROCE) of the company is 18.7%.
• The stock price CAGR of the company is 160% for the last 3 years.
• The company’s compounded profit growth over the previous 3 years stands at 16%.

Ircon International

Ircon, a construction company, diversifies into complex infrastructure projects. Its experience with large-scale projects and good financial metrics make it a key participant in the infrastructure sector.

• At present, the return on equity (ROE) of the company is 16.8%.
• The dividend payout of the company is at a healthy level of 36%.
• The company has a stock price CAGR of 53% for the last 5 years.

ARSS Infrastructure Projects Ltd 

ARSS infrastructure was established in 2000. It is engaged in the construction business including railway infrastructure. Over the years, the firm has built expertise in working on railway projects. It now builds bridges, supplies ballast & sleepers, and also links tracks.

• The company’s working capital requirements have improved from 182 days to 136 days.
• The compounded profit growth for the last 3 years stands at 30%.
• The cash from operating activity has increased to 8 crores in FY 23.

Texmaco Rail and Engineering Ltd

Texmaco Rail & Engineering Ltd is a freight car manufacturer. It is the largest supplier of wagons to the Indian Railways. It also designs and manufactures special-purpose wagons for core sectors like cement, alumina, oil, fertilisers, and the defence sector.

• The return on equity (ROE) of the company is 5.88%.
• The company’s return on capital employed (ROCE) currently stands at 11.4%.
• The company’s profit before tax has increased to Rs. 72 crores in the last quarter of FY 24 from Rs. 52 crores.

Titagarh Wagons Limited (TWL)

TWL, a major Indian goods wagon manufacturer, makes passenger and metro rail coaches. It has factories in India and Italy. Its product range also includes electric propulsion equipment like traction motors and vehicle control systems. 

• The company is almost debt-free.
• The company has a good profit growth of 84.5% CAGR over the last 5 years
• The working capital requirement of the company has reduced from 83.6 days to 64.6 days.

Jupiter Wagons Ltd

Jupiter Waggons Limited is India's largest railway engineering firm, producing freight waggons and passenger coaches. It has a railway rolling stock production plant, where an alloy steel foundry is equipped to provide critical casting components for manufacturing waggons.

• The company has a good profit growth of 80.1% CAGR over the last 5 years.
• The return on equity (ROE) of the company stands at 27.4%.
• The stock price CAGR of the company for the last 5 years is 112%.

Features of Indian Railways Shares

Check out the features of Indian Railways share below. 

Vital Role in Transportation Infrastructure and Economic Development

India's railway sector is crucial for the nation's transportation infrastructure and economic development. It is the fourth largest network globally, covering over 68,000 kilometres.

Facilitating Mobility Needs

The sector plays a significant role in facilitating the movement of people and goods, meeting India's transportation needs effectively.

World's Largest Passenger Carrier

As the world's largest passenger carrier, Indian railways transport millions of passengers daily, fulfilling the needs of India's large population.

Contribution to Goods Transportation

Indian railways transport goods, facilitating the movement of essential commodities and industrial goods. It offers services such as catering, tourism, parcel delivery, and various train types.

Investments in Modernisation and Expansion

To stay ahead of technological trends and increasing demands, Indian railways are investing in modernisation and expansion projects. These investments focus on leveraging advanced technologies to enhance operational efficiency and passenger comfort.

Extensive Network Coverage

The extensive railway network spans across major cities, towns, and even remote rural areas. This extensive coverage facilitates economic activities, promotes tourism, and fosters social connectivity.

Modernisation Initiatives

Modernisation initiatives in the Indian railway sector aim to enhance operational efficiency, safety standards, and service quality. They follow best global practices and sustainability goals, ensuring the sector remains efficient and environmentally friendly.

How to Invest in the Best Rail Stocks in India?

The Indian railway sector offers various investment options. These include investing in individual railway stocks, mutual funds focused on railway stocks, or exchange-traded funds (ETFs) tracking the railway industry. You can purchase shares of specific railway companies listed on stock exchanges, providing exposure to their performance and potential growth prospects. 

Mutual funds and ETFs offer diversified exposure to the railway sector by investing in a basket of railway stocks managed by professional fund managers. You may also start systematic investment plans (SIPs) in railway-focused mutual funds. SIPs in railway-focused mutual funds or ETFs allow investors to invest a fixed amount regularly at predefined intervals, offering benefits such as rupee-cost averaging and facilitating long-term wealth creation.

Benefits of Investing in Best Railway Stocks in India

The Indian railway sector is experiencing significant growth due to government support, new technologies, and rising demand, attracting investors who see potential in railway stocks for several key reasons.

• Government Backing: The Indian government is dedicated to enhancing its transportation infrastructure by increasing the budget allocation for railways in the Interim Budget. This fosters investor confidence in the sector's growth potential.
• Diverse Projects: The fiscal year 2024-25 projects include three major economic railway corridor programs, aimed at optimising logistics for energy, minerals, and cement, improving port connectivity, and upgrading busy corridors, as part of the PM Gati Shakti plan for multi-modal connectivity.
• Meeting Passenger Expectations: The railways are upgrading 40,000 rail bogies to Vande Bharat standards, prioritising passenger safety and comfort. Modernised interiors could enhance passenger experience, potentially increasing demand for railway services.
• Long-term Investment Opportunity: Railway stocks are considered long-term investments due to their long-term growth potential and the potential for investors to participate in a sector with promising prospects, as building and maintaining railway infrastructure takes time.

The Indian railway sector's recent growth, supported by government and technological advancements, presents promising opportunities for investors seeking long-term stability.

Tips and Strategies for Investing in Rail Stocks

The tips provided make it easier to navigate the railway share market confidently and benefit from its growth and stability.

• Do Your Research: Research rail stocks thoroughly to understand the company's business model, financial performance, and competitive position, as this knowledge will guide your investment decisions.
• Invest for Long Term: Railway shares in India are a long-term investment with potential for steady growth. So, it's crucial to have a patient outlook and be willing to hold onto your investments for the long haul.
• Diversify Your Portfolio: Diversification is crucial for reducing risk and minimising potential losses in railway shares. This is because it involves investing in a variety of stocks to spread out your investment. 
• Regularly Rebalance Your Portfolio: Regularly review and rebalance your rail stock portfolio to ensure your investments align with your risk tolerance and investment objectives. 
• Consider Stop-Loss Orders: Stop-loss orders are a strategic method to protect profits or limit losses by automatically selling shares in the company when IRCTC share drops significantly. 
• Be Patient: Investing in rail stocks is a long-term strategy, so don't expect instant wealth. Stick to your strategy, allowing your investments to grow and yield returns.

Before investing in the best Indian railway stocks in India, it's crucial to conduct thorough research or consult a financial advisor for informed decisions.

Conclusion
The Indian railway sector offers long-term stability and growth opportunities due to government support, diverse projects, and rising demand. Railway stocks are attractive due to efficiency, extensive network coverage, and modernisation initiatives. Investors can navigate the market confidently by following prudent strategies, conducting thorough research, and diversifying portfolios. You can experience the simplest online trading with BlinkX and enjoy trading with zero brokerage fees. You can avail of new-age trading facilities with the BlinkX share market app. Remember, staying updated on recent developments and consulting financial advisors is essential for informed investment decisions in the best railway stocks in India.