IRFC Vs RVNL Share Prices: Top Railway Stocks Give Over 100% Returns In 2024, Which To BUY/SELL?

Indian Railway Finance Corp Ltd (IRFC) and Rail Vikas Nigam Ltd (RVNL) are the top two railway stocks currently. Both the stocks are multi-bagger and have given more than 100% returns in 2024. In the long term, RVNL outperforms IRFC by 1,841%. IRFC's all-time gains are around 616% on BSE as of June 10, 2024.

With the stock already overvalued, who is offering better returns on equity (RoE)? Which one should you buy for further gains?

IRFC Share Price:

At the time of writing, IRFC's share price surged by 3% to trade at Rs 178.80 apiece on BSE. The stock touched an intraday high of Rs 179 apiece on June 10. The stock's 52-week high and low is at Rs 199.95 apiece and Rs 32.10 apiece respectively.

IRFC's market cap is nearly Rs 2.34 lakh crore. In a month, the stock has zoomed by 21%, while in 6 months, the gain is about 116% which can be credited in 2024. YTD, the stock is higher by 77%. As per BSE data, the PE ratio of the stock is at 35.29x, while the return on equity (RoE) is at 13.07% stable.

As per the Trendline data, the consensus recommendation from 2 analysts for Indian Railway Finance Corporation Ltd. is BUY.

Market expert Rajesh Satpute in a conversation with CNBC Awaaz advised investors to book partial profit by selling some stocks at around Rs 190-200. He believes that as a High beta stock, IRFC fluctuates significantly with an increase in market volatility.

While at Trendlyne, IRFC is under its Expensive Rockets (DVM) which means that these stocks are those with medium to high durability scores, expensive valuation and high momentum. While these stocks may be gaining, their price makes them relatively expensive for investors to pick up.

Both FIIs and Mutual funds have decreased their shareholding in IRFC. FII/FPIs holding of IRFC dropped to 1.08% in the March 2024 quarter from the previous 1.15%. While MFs' shareholding plunged to 0.18% in the March 2024 quarter from earlier 0.40%.

Holding a Miniratna status, Indian Railway Finance Corporation (IRFC) is the dedicated funding arm of Indian Railways. Its primary objective is to meet the predominant portion of the 'Extra Budgetary Resources' (EBR) requirement of the Indian Railways through market borrowings at the most competitive rates and terms. The Company's principal business therefore is to borrow funds from the financial markets to finance the acquisition/creation of assets which are then leased out to the Indian Railways.

RVNL Share Price:

RVNL share price gained by as much as 3.2% to hit an intraday high of Rs 386.50 apiece. The stock continued on a positive note. The stock's 52-week high and low is at Rs 424.95 apiece and Rs 116.15 apiece respectively.

Unlike IRFC, RVNL has gained much sharper on exchanges. In a month, the stock is up by 44%, while it surged by 111% in six months. YTD, the stock is up by 107% on BSE.

As per BSE data, the PE ratio of RVNL is at 53.36x, while ROE at 18.60% is also stable. As per Trendlyne data, the consensus recommendation from 2 analysts for Rail Vikas Nigam Ltd. is HOLD. EPS is expected to grow by 2.0% in FY25.

Market expert Vikas Sethi of Sethi Finmart in a conversation with Zee Business Managing Editor Anil Singhvi, recommended BUY on RVNL for a target of Rs 425, while keeping a stop loss of Rs 395.

RVNL is under the category of Expensive Stars (DVM) at Trendlyne which are the stocks with high durability and momentum scores (above 50-55) and expensive valuation (less than or equal to 30 in valuation score). These stocks are considered high performers that are however expensive at their current price.

In RVNL as well, both mutual funds and foreign investors have reduced their holding. FIIs/FPIs holding dropped to 2.32% by the end of Q4FY24 from earlier 2.6%. While MFs holding slipped to 0.09% in the March 2024 quarter from earlier 0.14%.

RVNL works as the construction arm of the Ministry of Railways for project implementation and transportation infrastructure development. The organization undertakes project execution from concept to commissioning and creates project-specific SPVs.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.