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Introduction
The Indian railway system has been crucial to the nation’s transportation for many years. In the 2024-2025 Interim Budget, an impressive amount of Rs 2.55 lakh crore was allocated to the Indian Railways, a 5.8% increase from the previous year. This led to increased confidence from investors, boosting railway-related stocks and significant growth over the past year.
The Indian Railway Industry has been a global leader for over 170 years, vital to the country’s economy. It serves millions of passengers daily and supports freight transfers, contributing to the nation’s growth. The history of India’s railway network dates back to 1853, when the first passenger train ran from Mumbai to Thane during the British colonial era. Despite challenges, the industry is looking at promising developments such as high-speed rail corridors, expansion of the Vande Bharat Express network, and modernization of existing infrastructure. Increased investor interest in the sector is also notable.
Therefore, in this article, we have recommended the top 5 railway stocks in India in 2024, where investment in such stocks can give probable chances of impressive returns. The rail stocks are as follows.
A) CONCOR (Container Corporation of India Ltd.)
About the Company
CONCOR (Container Corporation of India Ltd.) primarily transports containers by rail, but also operates ports, air cargo complexes, and cold chains.
As of March 2022, the Government of India holds 54.8% of the company through the Ministry of Railways. It plans to sell approximately 30.8% of its stake to a strategic investor and relinquish control of the management, leading to potential changes in the company’s leadership and direction.
The company operates 60 terminals, providing inland transport by rail for containers, managing ports and air cargo complexes, and establishing a cold chain. It aims to promote containerization in India and offers road services for door-to-door logistics.
CONCOR is committed to providing responsive, cost-effective, efficient, and reliable logistics solutions, focusing on customer satisfaction and value for money. In the financial year 2021, the company paid a fee of Rs 517.39 crore per the existing policy after giving up 17 leased terminals from the Indian Railways.
Why you should invest in Concor?
- The company is almost debt-free.
The company demonstrates a low Debt to Equity ratio (avg), indicating a strong financial position. However, there is concern about the long-term growth due to the operating profit growing at an annual rate of 0% over the last 5 years.
Recent results for March 24 show stagnant performance, but there are no key negative triggers to worry about.
2. The company has been maintaining a healthy dividend payout of 40.4%
3. Strong Technicals: The Stock is in the Bullish range.
The stock is technically in a bullish range, with the technical trend improving from Mildly Bullish on 26-Apr-24, generating a 6.82% return.
Multiple technical indicators such as MACD, Bollinger Band, KST, DOW, and OBV suggest a bullish outlook for the stock.
Bullish Daily Moving Averages indicating near-term price strength.
4. Strong Financials of the company
Despite these positive indicators, the stock has a high ROE of 10.7, leading to a very expensive valuation with a Price Book Value of 5.6. The stock trades at a premium compared to its average historical valuations.
Over the past year, the stock has generated a substantial return of 71.87%, outperforming the market. However, the company’s profits have only risen by 7.4%, resulting in a high PEG ratio 7.1.
An upward trend can be seen in most of its financials over the years as described below.
5. Moreover, institutional holdings are high at 41.62%, indicating strong confidence from sophisticated investors who have better capability and resources to analyse companies’ fundamentals than most retail investors.
In summary, the stock has shown market-beating performance in the long term, and it has outperformed the market in the previous 3 years.
6. Future prospects of the company
The container traffic at all Indian gateway ports has steadily increased over the past decade at an average rate of 6.84%, with the number of containers handled rising from 7.58 million TEUs in 2007-08 to 14.69 million TEUs in 2017-18.
Trade growth outlook is positive, especially in the domestic sector. CONCOR, a licensed Container Train Operator, is adopting strategic approaches to provide comprehensive logistics and transport solutions.
The company plans to expand its presence, form strategic alliances, and venture into new business prospects. CONCOR aims to offer integrated transport services covering all modes of transportation, streamline coordination, and adopt technology for operational efficiency and cost-effectiveness.
A summary of the above highlights for Concor:
| Dividend payout | 40.40% |
| Strong Technicals | Bullish range |
| ROE | 10.7% |
| Price Book Value ratio | 5.6 |
| PEG ratio | 7.1 |
| Institutional holdings in share capital | 41.62% |
B) Ircon
About the Company
Ircon International Limited, also known as IRCON, is a construction company established by the Indian government in 1976. It is recognized for its high-quality work and consistent Performance in the public sector. The company operates in several states in India and countries such as Malaysia, Nepal, Bangladesh, Mozambique, Ethiopia, Afghanistan, the U.K., Algeria, and Sri Lanka.
IRCON specializes in construction services for infrastructure projects,
focusing on roadway and highway construction, EHP substation engineering and construction, and MRTS. The company has completed over 300 projects in India and over 100 across 21 countries worldwide.
IRCON is actively involved in important nation-building projects and operates in challenging terrains and regions in India and abroad.
Why you should invest in IRCON?
- The company has been maintaining a healthy dividend payout of 36.0%
- Strong Technicals: The Stock is in the Bullish range.
- According to the latest financial data, the company maintains a low debt-to-equity ratio (average), indicating a strong financial position with minimal reliance on borrowed funds. Additionally, the company has demonstrated positive financial performance over the past five consecutive quarters, reflecting its consistent growth and stability.
- Regarding financial metrics, the Return on Capital Employed (ROCE) for the most recent half-year period stands at 16.70%, showcasing efficient capital utilization. The Operating Profit to Interest ratio is also robust at 7.00 times, indicating strong profitability about interest obligations. Moreover, the Profit Before Tax (PBT) less Other Income (OI) for the latest quarter is reported at Rs 204.59 crores, highlighting the company’s healthy financial performance.
- From a technical analysis perspective, the stock is currently exhibiting a bullish trend and has shown improvement since 06-Jun-24, generating a substantial return of 9.32%. Various technical indicators such as Moving Average Convergence Divergence (MACD), Bollinger Bands, Know Sure Thing (KST), Dow Theory, and On-Balance-Volume (OBV) all signal bullish sentiments for the stock.
- Despite its strong financial performance, the company’s Return on Equity (ROE) is reported at 15.8%, suggesting an expensive valuation with a price-to-book ratio of 4.4. The stock trades at a premium compared to its historical average valuations, indicating potentially heightened investor confidence and positive market sentiment.
- Over the past year, the stock has generated an exceptional return of 225.00%, outpacing market benchmarks while achieving a 21.5% increase in the Price/Earnings to Growth (PEG) ratio of 1.3, indicating a balanced growth trajectory.
- Furthermore, institutional investors have exhibited increased confidence in the company, with a collective stake increase of 0.68% over the previous quarter, resulting in their combined ownership of 5.31%. This signals positive institutional sentiment and confidence in the company’s fundamentals.
A summary of the above highlights for Ircon:
| Dividend payout | 36.00% |
| Technicals | Bullish range |
| Return on Capital Employed (ROCE) | 16.70% |
| Operating Profit to Interest ratio | 7.00 times |
| Return on Equity (ROE) | 15.80% |
| price-to-book ratio | 4.4 |
| Price/Earnings to Growth (PEG) | 1.3 |
| Institutional holdings in share capital | 5.31% |
C) RailTel
About the Company
RailTel, a Central Public Sector Enterprise, is an ICT provider and one of India’s largest neutral telecom infrastructure providers. It was established in 2000 to modernize the existing telecom system for train control, operation, and safety and to create a nationwide broadband and multimedia network. RailTel owns a pan-India optic fiber network that covers important towns, cities, and rural areas.
RailTel’s optic fiber network spans over 61000+ route kilometers and reaches 6108+ railway stations across India, with citywide access covering 21000+ kilometers.
RailTel holds various certifications including Tier-III (Design & Facility), ISO 27001:2013 for Information Security Management Systems, ISO 20000:2018 for Service Management Systems, ISO 9001:2015 for Quality Management Systems, ISO 27017:2015 for Cloud Security, ISO 27018:2019 for Data Privacy in Cloud Service, ISO 27033 for Network Security, and CMMI Maturity Level-4 for Process Improvement, which reflect its commitment to quality and standards.
RailTel’s partnership with the Indian Railways underscores its stability and reliability. The company undertakes projects such as providing connectivity services like IP-based video surveillance systems at stations, ‘e-Office’ services, and implementing connectivity to support various organizations within the Indian Railways. RailTel also offers passenger services, including content-on-demand and Wi-Fi, across major railway stations in India.
Why you should invest in RailTel?
- The company has a low debt-to-equity ratio, indicating a stable financial position. However, it has shown poor long-term growth, with an average operating profit growth rate of 5.16% over the last five years.
- On a positive note, the company has achieved positive results for the last 3 consecutive quarters, with net sales reaching the highest at Rs 832.70 crore and a PAT(Q) growth of 21.1% to Rs 68.11 crore.
- The stock is currently in a technically bullish range, although the technical trend deteriorated from bullish on 03-Jun-24, resulting in -1.06% returns since then.
- Despite the bullish indicators such as MACD, Bollinger Band, and KST, the stock is trading at a premium compared to its historical valuations. With an ROE of 12.5, the stock is considered to have a very expensive valuation with a 7.8 Price to Book Value.
- Over the past year, the stock generated a remarkable return of 224.41%, outpacing the market performance. However, the company’s PEG ratio stands at 1.2, indicating a slightly overvalued position.
- Furthermore, the majority shareholders are the promoters, and the stock has shown market-beating performance over the long term as well as in the near term, outperforming the market index in the previous three years.
A summary of the above highlights for RailTel:
| Technicals | Bullish range |
| ROE | 12.50% |
| Price to Book Value Ratio | 7.8 |
| PEG | 1.2 |
D) JWL
About the company
Jupiter Wagons Limited (JWL) offers a wide range of transportation solutions, including freight wagons, locomotives, passenger coaches, braking systems, metro coaches, commercial vehicles, ISO marine containers, and related products like couplers, draft gears, bogies, and CMS crossings.
The Company has manufacturing facilities in Kolkata, Jamshedpur, Indore, and Jabalpur and is fully backwards integrated with its foundry operations. JWL has partnerships with leading global companies such as Tatravagonka A.S. (Slovakia), DAKO-CZ (Czech Republic), Kovis Proizvodna (Slovenia), and Telleres Alegria S.A. (Spain).
With a history spanning over four decades, the Company has used its advanced technology and strong financial position to become a one-stop shop for transportation solutions.
It serves sectors including railways (freight and passenger), metro rail, automobile, transportation, logistics, construction equipment, municipalities, healthcare, energy, mining, and infrastructure. JWL has a reputable client base, including Indian Railways, American Railroads, Indian Ministry of Defense, Tata Motors, GE, Volvo Eicher Motors, Bharat Benz, and Avia Motor.
Jupiter Electric Mobility Private Limited (JEM) is a subsidiary of Jupiter Wagons Limited. Jupiter Wagons Limited provides transportation solutions by rail, road, and marine. With a focus on Smart City development and modern infrastructure, JWL has launched JEM. JEM is a brand for commercial EVs that helps businesses contribute to a sustainable environment. JEM aims to be a reliable, eco-friendly brand with an innovative and flexible approach.
Why you should invest in JWL?
- The company demonstrates high management efficiency with a return on Capital Employed (ROCE) of 18.31%.
- It has a low Debt to EBITDA ratio of 0.55, indicating a strong ability to service debt. The company has shown healthy long-term growth, with net sales growing annually at 75.85% and operating profit at 89.18%.
- The company’s net profit increased by 28.06%, leading to very positive results declared on March 24. Additionally, the company has reported positive results for the last nine consecutive quarters. In the previous quarter, the net sales were recorded at the highest level of Rs 1,115.41 cr. Moreover, the operating profit to interest ratio was 13.70 times, while PBDIT (Profit Before Depreciation, Interest, and Tax) was highest at Rs 147.38 cr.
- From a technical perspective, the stock is in a bullish range. The technical trend has improved from mildly bullish on May 6, 2024, generating a return of 73.32%. Multiple technical indicators suggest bullish sentiment, such as MACD, Bollinger Band, KST, DOW, and OBV.
- Furthermore, institutional investors have increased their participation, collectively increasing their stake by 0.89% over the previous quarter and now holding 4.2% of the company. Institutional investors are known for their strong capability and resources in analysing company fundamentals, often providing valuable insights for all investors.
A summary of the above highlights for JWL:
| Return on Capital Employed (ROCE) | 18.31% |
| Debt to EBITDA ratio | 0.55 |
| Operating profit to interest ratio | 13.70 times |
| PBDIT | Rs 147.38 crore |
| Technicals | Bullish range |
| Institutional holdings in share capital | 4.20% |
E) RVNL
About the company
The then Hon’ble Prime Minister, Late Shri Atal Bihari Vajpayee, envisioned the incorporation of RVNL as a PSU on 24.01.2003 to address the infrastructure deficit on Indian Railways. RVNL was granted Mini-Ratna status in September 2013 and had a turnover increase of 44.44% for the financial year 2019-20. The authorized share capital is Rs. 3000 cr., with paid-up share capital of Rs. 2085 cr. The company was listed after disinvesting its stake of 12.16% through an IPO.
Rail Vikas Nigam Limited (RVNL) is a government-owned company responsible for developing and maintaining railway infrastructure. RVNL’s main objectives are to secure project funding and resources, ensure projects are completed on time and within budget, and promote public-private partnerships in railway projects.
RVNL is committed to environmentally friendly construction practices and sustainable development in all its railway projects. It also handles the operation and maintenance of completed railway projects and is authorized to acquire rail infrastructure assets with approval from the Ministry of Railways.
RVNL is responsible for arranging project funding, project development and execution works, creating project-specific entities for individual works, and commercializing projects when necessary and feasible. Once a railway project is completed, the respective Zonal Railway takes over its operation and maintenance under a specific financial arrangement. Additionally, RVNL may adopt a build-operate-transfer (BOT) approach to generate revenue streams, with the Ministry of Railways paying the Access Charge/User Charge.
Why you should invest in RVNL?
- The company has demonstrated healthy long-term growth, with net sales growing at an annual rate of 16.80% and operating profit at 23.57%. Furthermore, the debt-equity ratio (half-yearly) is at its lowest at 0.69 times, indicating a strong financial position.
- The operating profit to interest (quarterly) ratio is at its highest at 3.03 times, reflecting efficient utilization of operating profit to cover interest expenses. Net sales at Rs 6,714.01 crore have grown at an impressive rate of 28.5%, indicating strong revenue growth.
- Technically, the stock is in a bullish range. The technical trend has improved from mildly bullish on 18th May 2024, generating a significant return of 30.82%.
- Multiple technical indicators, such as MACD, Bollinger Band, KST, DOW, and OBV, suggest a bullish outlook for the stock.
- The company’s return on capital employed (ROCE) stands at 11.4, indicating a very expensive valuation with an enterprise value to capital employed ratio of 7.2. However, the stock trades at a discount compared to its average historical valuations.
- Over the past year, the stock has generated a remarkable return of 216.64%, while its profits have risen by 10.8%. The company’s PEG ratio is 4.8, suggesting potential overvaluation.
- Despite the company’s size, domestic mutual funds hold only 0.34% of the company. This might indicate that they would be uncomfortable other than the price or the business and unable to conduct in-depth, on-the-ground research on companies.
A summary of the above highlights for RVNL:
| Operating profit to interest (quarterly) ratio | 3.03 times |
| Technicals | Bullish range |
| Return on capital employed (ROCE) | 11.4 |
| Enterprise value to capital employed ratio | 7.2 |
| PEG ratio | 4.8 |
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Disclaimer: Investing in the Equity market in India is subject to risks, i.e. the market keeps on fluctuating. This article is purely for educational purpose. The views expressed and data provided here are by Equitypandit’s team. Kindly do not completely depend on the information provided as the risk appetite differs from individual to individual and there are various other factors in the market to determine the factors to invest in the market.
