Railway stocks surge as orders restart: Rites, Titagarh Rail, and RVNL lead the rally

Synopsis

Shares of Rites (Rail India Technical and Economic Service) jumped 15.7%, followed by Titagarh Rail Systems, which gained 12.8%. Shares of Rail Vikas Nigam(RVNL), BEML and Indian Railway Finance Corporation (IRFC) went up between 6% and 9% at close.

Mumbai: Shares of railway-related companies surged in a breakout rally on Friday, riding the bullish wave in mid-cap and small-cap stocks, amid optimism that orders from the Railways have restarted.

Shares of Rites (Rail India Technical and Economic Service) jumped 15.7%, followed by Titagarh Rail Systems, which gained 12.8%. Shares of Rail Vikas Nigam(RVNL), BEML and Indian Railway Finance Corporation (IRFC) went up between 6% and 9% at close.

"The run-up in railway stocks is part of sector rotation in the market, as currently we are seeing the outperformance in PSU stocks, which had been quite beaten down in the recent market correction," said Sunny Agrawal, head of fundamental research at SBI Securities.

Agrawal said that management of Tube Investments of India in their results call also said that railway order inflows are back on track, which has eased concerns around the slowdown in the sector.

Agencies

On Thursday, Rail Vikas Nigam said in a stock exchange disclosure that it had received a ₹115.8 crore contract for upgradation work from the Central Railway. Separately, Ircon International told exchanges on Thursday it received a letter of acceptance (LOA) from the North Western Railway for 'Provision of Remote Diagnostic & Predictive Maintenance System' for a consideration of ₹51.6 crore.

"Most of these stocks have also seen a technical breakout and are currently trading above their key moving averages," said Agrawal.

Shares of most railway-related companies are still down 10-25% from their pre-market correction levels, which started at the end of September. The benchmark Nifty 50 is down 4.4% from the end of September.

Apurva Sheth, head of research at Samco Securities said that defence and railway stocks moved in tandem during last year's bull market, and this performance is being repeated right now.

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