Railway Stocks Engines To Soar: Brokerage Recommends BUY On These Rail Stocks; BEML Vs Rites Vs RVNL Vs IRFC

Brokerage Elara Capital is optimistic in the railways sector, with a pick-up in inflows in Q4FY25 compared to the slow start to CAPEX spending in FY25 due to elections-led delay. As per the data, 76% of the gross budgetary allocation has been spent as of January 5, 2025. Further, the order book is expected to gain momentum in FY26 coupled with the large pipeline. Following this, the brokerage is bullish on several railway stocks, while it upgraded on SIEMENS, ABB and BEML.

Elara Capital On Indian Railways:

In its latest note, Elara said, "Expect pick-up in inflow in Q4FY25 set against a slow start to capex spending in FY25 given elections-led delay (76% of gross budgetary support spent as of 5 January 2025). Order momentum may pick up further in FY26, led by new offerings in rolling stock, an opportunity worth INR 4.5tn in network expansion and a large pipeline for Kavach (INR 450bn opportunity).

In FY26, the brokerage stated that many modernized trainsets will be launched for the first time - Vande Bharat (VB) Sleeper (undergoing trial), Amrit Bharat (non-AC version of VB) and Vande Metros (prototype under trial). Post the launch, tendering would rise, as the Railways will focus on coach modernization.

Also, the brokerage stated that rolling stock - mainline electric multiple units (MEMUs; replacing ~2,400nos of diesel EMUs in FY25-26; opportunity size at ~INR 50bn), Linke-Hofmann-Busch (LHB; replacing ~31,670 ICF coach operational), and Namo Bharat Rapid Rail (for inter-city travel) - will be upgraded.

Furthermore, Elara believes that Kavach is at the forefront given the rising number of train accidents.

It said, expect a sharp rise in approved vendors from three, led by low deployment (1,548rkm completed versus 68,584rkm), large order pipeline (bids for 15,000rkms in FY26; Kavach for 10,000 locos) and overall opportunity size at INR 450bn.

Which Railway Stocks To Buy?

Elara gives a positive outlook on the sector. It said, "We upgrade SIEM to Buy from Accumulate with TP cut to INR 7,120 (from INR 7,670) on 65x (from 70x) September FY26E P/E, ABB to Accumulate from Reduce with TP cut to INR 6,660 (from INR 7,170) on 65x (from 70x) September CY25E P/E and BEML to Accumulate from Reduce with TP unchanged at INR 4,190."

Additionally, Elara has retained Accumulate on AMBER but raised TP by 4% to INR 7,420 on 52x (from 50x) September FY26E P/E. Also, monitor plays such as HBL Engineering, Kernex Microsystems, Titagarh Rail Systems, Jupiter Wagons, Texmaco Rail, RVNL, IRCON, Kalpataru Projects, Kaynes Technology, Syrma SGS Technology, BHEL, Concord Control Systems and Quadrant Future Tek.

Railway Stocks On January 15:

The majority of railway stocks were in green on January 15. Ircon International, IRCTC, IRFC, RailTel Corp Of India, RITES, Texmaco RAIL, and Titagarh Rail surged marginally to 1.2%.

However, BEML and ConCor stocks were marginally down.

Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.