India’s economy is based on the Indian Railway. It employs more than 1.4 million people and covers a distance of 67,850 km. It is now India’s largest employer as a result. Because the Indian Railways are so big, a lot of businesses are closely connected to them. Let’s examine a few of these Top Railway Stocks in India. We shall examine several listed businesses connected to the Ministry of Railways in this post. Let’s arm ourselves with some industry knowledge first, though.
Railway Stocks in India- Industry Overview
In contrast to the United States, India’s railway sector is still under government control. In the industry as a whole, the government still controls how the entire network is operated. These businesses provide the Indian Railways with engineering consulting, funding, ticketing, and other services. With a capital expenditure of ₹1.07 trillion, the Union Budget allotted ₹1.1 trillion for the Indian Railways in FY2022.
Since 2015–16, the number of passengers and freight on Indian railways has been continuously rising. All passenger train services were terminated, with the exception of freight and migrant worker trains, since the epidemic had devastated the business. Public sector companies are the biggest stockholders when it comes to investing.
1# IRCTC – Top Railway Stocks in India
A Miniratna corporation is the Indian Railway Catering and Tourism Corporation (IRCTC). It is an organization in the public sector run by the Ministry of Railways. The PSU is in charge of providing food and hospitality services on trains, at train stops, and at other sites. In order to modernize, professionalize, and oversee the catering and hospitality activities at stations, trains, and other sites, the Indian Railways established it back in September 1999. In FY20, its revenues reached a height of Rs. 2,264 crores.
Due to the pandemic, they drastically decreased to Rs. 783 crores in FY21. The company gained popularity after revealing a net profit of Rs. 664 crores for the fiscal year 2021–2022, with total revenue of Rs. 1,879 crores.
2# Container Corporation of India (CONCOR) – Top Railway Stocks in India
CONCOR is in the business of coordinating container inland transit via Indian Railways. The company Container Corporation was established in March 1998. After the Indian Railways turned over a network of seven inland container terminals, it began operations the following year, in 1989. The Government of India owns the majority of it.
The Railway Ministry intends to lower the land license charge from 6% to 3.5% in order to facilitate the company’s valuation. CONCOR is required to pay a regular charge because it operates on ministry-owned territory. It was announced last year by the Adani group that it is building a war chest in order to purchase CONCOR.
3# IRFC – Top Railway Stocks in India
The Ministry of Railways’ funding division is called the Indian Railway Finance Corporation. Term loans from banks and other financial institutions, commercial papers, taxable and tax-free bond issuances, external commercial borrowings, and more are some of the ways from which IRFC obtains its funding. December 1986 saw the founding of IRFC. The company was given the responsibility of raising Rs. 1,04,369 crores, which is a record amount to be raised for railway projects.
It effectively accomplished the objective set forth by the Ministry of Railways. The company’s revenue climbed by 28.71% to Rs. 20,299 crores in FY22, while its net earnings came to Rs. 6,090 crores.
4# Rail Vikas Nigam Limited – Top Railway Stocks in India
The Railways Ministry’s infrastructure projects in India are carried out by RVNL, another government organization on the list. The construction of large bridges, the installation, renovation, and alteration of railroad tracks, as well as the establishment of manufacturing facilities or workshops, are examples of these undertakings. The beginnings of Rail Vikas Nigam Limited date back to 2002. It was established as a component of the wider National Rail Vikas Yojana plan to fill the gap in the nation’s rail infrastructure. Over the previous five years, the company’s revenues have increased at a quick rate of 26.8% GR. Net profits have also consistently increased.
#5 RITES – Top Railway Stocks in India
The government owns Rail India Technical and Economic Service, or RITES, an engineering consulting firm. It was established in 1974 with the intention of offering advisory services to the rail transportation sector. Since then, the business has expanded into a number of diverse sectors, such as ports, airports, urban planning, and road infrastructure. 54% of the company’s revenue in FY21 came from project consulting. Additionally, the business has previously worked on projects related to metro rails.
Furthermore, RITES receives revenue from the export of railroad cars. The firm has paid out a dividend of more than 70% for the past two years, and it currently offers a return on equity of up to 20%.
Now that we have thoroughly discussed the Top 5 Railway Stocks in India, let’s quickly examine some smaller businesses.
- BEML: Railways, mining, and the military are just a few of the industries for which Bharat Heavy Earth Movers produces heavy machinery and vehicles. In FY21, the rail and metro industries accounted for 38% of its income.
- Railtel: Indian Railways relies on Railtel Corporation of India to maintain and develop communication and network systems for train control operations and safety.
- Titagarh Wagons: Titagarh Wagons is primarily a private sector railway stock in India that produces passenger and transportation wagons for Indian railways.
- Texmaco Rail & Engineering: The second business in the private sector on this list is Texmaco. It works on the production of steel constructions and different types of equipment. Rail EPC accounted for 46% of their operating income in FY21.
A significant opportunity for investors seeking to diversify their portfolios and capitalize on the growth potential of the railway industry is presented by the Union Budget’s introduction of new projects, renovation of premium coaches, and increased funding for track restoration. A solid foundation for railway stocks is also provided by the government’s dedication to enhancing the nation’s transportation infrastructure, making them an attractive investment option.