Indian Railway Penny Stocks: Cheap shares in the railway business are becoming increasingly popular due to significant developments. Indian Railways, one of the largest rail networks in the world, is essential for the country’s transport infrastructure and economy. The Indian government has promised a massive budget of Rs 2.55 lakh crore for the financial year 2024-2025. This has led to a significant increase in these stocks, which are intended to improve infrastructure and modernize services. The increasing investment due to the continued growth and strategic significance of this sector has boosted investor confidence and given railway penny stocks a long-term growth opportunity.
Why Invest Railway Penny Stocks ?
India’s rail network is growing quickly & more lines will be built between 2015 and 2025 than in the preceding 65 years. The government is working to modernize the railways, with intentions to fully electrify the network and export the Vande Bharat trains.
To accommodate the increasing demand for passengers, a huge expenditure of Rs 1 trillion has been set aside for the purchase of new trains over the next 15 years. Investors can look for lesser-known rail-related stocks, even if pure railway penny stocks are uncommon because the most have witnessed price increases. These equities which are usually priced between Rs 1 and Rs 100, have the potential to yield large gains, but they also carry dangers because of their limited information and poor liquidity.
As the railway sector grows, it is expected to significantly boost India’s economy and improve its position in the global market. Comparing a company’s order book to its market capitalization can help identify undervalued opportunities in this evolving industry. Lets Talk about Best Railway Penny Stocks.
Best Railway Penny Stocks
The Indian railway sector has several prominent companies offering investment opportunities. Let’s get into the leading railway Penny stocks and their overview:
1. Indian Railway Finance Corp (IRFC)
Indian Railway Finance Corporation (IRFC) is the financial arm of Indian Railways, established in 1986, which is responsible for raising funds for acquiring or creating assets leased to Indian Railways. The company operates under the Ministry of Railways and is classified as a systemically important non-deposit taking NBFC and infrastructure finance company.
IRFC has a market capitalization of ₹1,86,935 crore and a current stock price of ₹143. The company has made a net profit of ₹6,506 crore with total assets of ₹4,94,348 crore. It has a high debt-to-equity ratio of 7.83 and promoter holding of 86.4%. IRFC continues to support the growth and modernization of Indian Railways through strategic financial management.
2. IRCON International Limited (IRCON)
IRCON International Limited (IRCON), established in 1976, started as a railway construction company and later evolved into an integrated engineering and construction public sector company, handling major infrastructure projects in various sectors including railways and highways. It was awarded Mini Ratna Category-1 status in 1998 and achieved Navratna status in October 2023.
In FY2024, the Government of India reduced its stake in IRCON to 65% through a sale offer. With a market capitalization of Rs 20,736 crore and a current value of ₹220, IRCON has achieved sales of ₹11,406 crore and net profit of ₹921 crore, indicating its strong presence in the infrastructure sector.
3. Rail Vikas Nigam (RVNL)
Established by the Government of India in 2003, Rail Vikas Nigam Limited (RVNL) specializes in implementing various rail infrastructure projects as mandated by the Ministry of Railways. Its projects include track doubling, gauge conversion, construction of new lines, railway electrification, construction of major bridges, operation of workshops and manufacturing units.
RVNL works with the Ministry of Railways under a concession agreement and takes a share of the freight revenue. The company has a market capitalization of ₹85,726 crore and a current share price of ₹411. RVNL has generated sales of ₹20,310 crore and a net profit of ₹1,280 crore indicating its strong presence and performance in the rail infrastructure sector.
4. Indian Railway Catering & Tourism Corporation ( IRCTC)
Indian Railway Catering and Tourism Corporation Limited (IRCTC), established in 1999, is a Mini Ratna (Category 1) Central Public Sector Enterprise and the only company authorised by the Government of India to provide online ticketing, catering services and packaged drinking water at railway stations and trains.
Operating under the Ministry of Railways, IRCTC has expanded its operations in the hospitality, travel and tourism sectors and achieved Scheduled ‘A’ Public Sector Undertaking status in July 2024. The company has a market capitalisation of ₹61,040 crore and a current share price of ₹763. IRCTC has generated sales of ₹4,455 crore and net profit of ₹1,200 crore, indicating its significant role in the railway and tourism sectors.
5. Texmaco Rail & Engineering
Texmaco Rail & Engineering Limited, part of the Advantz Group, is a leading engineering infrastructure company, specializing in the construction of rolling stock, hydro-mechanical equipment, steel casting and rail EPC projects, bridges and other steel structures.
Although established in 1939 as Texmaco Limited, it was transformed into Texmaco Rail & Engineering Limited through demerger in 2010. Market capitalization of ₹ 7,962 crore and a current share price of ₹199, the company has achieved sales of ₹ 4,475 crore and net profit of ₹209 crore, highlighting its strong position in the rail and engineering sector.
Conclusion
The Indian Railway sector offers excellent opportunities for long-term stability and growth, driven by government support, various projects and growing demand. Railway stocks are attractive to investors due to its efficiency, extensive network and modernization initiatives. Investors can navigate the market with confidence through thorough research, prudent strategies and a diversified portfolio. It is important to stay updated on the latest developments and consult financial advisors to invest in India’s top railway stocks.