Railway stocks in focus as FM Nirmala Sitharaman reviews capex plan

Railway stocks have gained attention as Finance Minister Nirmala Sitharaman led a key review meeting on the Ministry of Railways' capital expenditure (capex) plan. Held in New Delhi, the meeting discussed significant developments aimed at enhancing rail infrastructure and operational efficiency. Among the highlights were projects focused on converting 40,000 rail bogies to Vande Bharat standards and implementing safety systems like Kavach. For those looking to invest in stocks, this sector offers growth potential as India ramps up its rail network modernisation and expansion efforts.

Vande Bharat Bogie conversion and Kavach System rollout

One major announcement was the expedited conversion of 40,000 normal rail bogies to Vande Bharat standards, a move that was initially outlined in the Interim Budget 2024-25. This development could generate increased interest among investors looking to invest in stocks related to railway infrastructure. Companies like Titagarh Rail, Texmaco, and BEML Ltd may benefit from the demand for upgraded rolling stock and modernisation initiatives.

Additionally, Sitharaman pushed for the timely implementation of the Kavach system, a vital safety feature in rail operations. Kavach works are currently underway across more than 3,000 route kilometres in key sections like Delhi-Howrah and Delhi-Mumbai. The Union Budget 2024-25 also allocated significant funds for the construction of three major Economic Railway Corridors under the PM Gati Shakti initiative, aimed at enhancing multi-modal connectivity in energy, mineral, and cement transport sectors. These projects, spanning 40,900 km with a budget of Rs 11.16 lakh crore, include 55 already sanctioned undertakings, totalling 5,723 km.

Railways Capex allocation and growth potential

This ambitious capex plan has already led to the identification of 434 railway projects, and with 101 projects set for appraisal this year, the scope for growth is immense. The focus on doubling and electrifying existing tracks, as well as constructing new railway lines, is expected to drive further improvements in the efficiency of InIndia'sail network.

Key takeaways

• Focus on converting 40,000 bogies to Vande Bharat standards could boost railway-related stocks.
• Kavach system implementation is on track across key routes, enhancing safety.
• Rs 2.55 lakh crore allocated for FY25, with major investments in rolling stock, new lines, and electrification.
• Key companies to watch include Titagarh Rail, Texmaco, BEML Ltd, and L&T, among others.