Shares of railway public sector undertakings (PSUs) extended their winning streak for a fifth consecutive session on Friday, December 26, powered by a potent mix of strategic investor positioning ahead of the Union Budget and renewed optimism surrounding the sector's long-term growth narrative.
Stocks Soar: RVNL Leads the Charge
The rally was broad-based, with several key players posting significant gains. Rail Vikas Nigam Limited (RVNL) emerged as the top performer, witnessing a sharp surge of 12.30% to close at ₹388.20 per share. Other major gainers included RailTel Corporation of India and Indian Railway Finance Corporation (IRFC), whose shares climbed up to 9% during the trading session. Even the Indian Railway Catering and Tourism Corporation (IRCTC), known for its defensive business model, saw its share price appreciate by nearly 5%, reaching ₹704 apiece.
What's Fueling the Railway Stock Rally?
Market analysts point to multiple converging factors behind this sustained upward movement. The primary catalyst is the growing investor anticipation in the run-up to the Union Budget 2026. Historically, railway stocks attract heightened buying interest before the budget, as markets price in expectations of continued and enhanced capital expenditure on the country's vast rail infrastructure.
"Indian railway stocks are rising as investors are factoring higher record budgetary allocations to Railways, and faster execution of projects like station redevelopment, electrification, Vande Bharat trains and dedicated freight corridors in coming few quarters," explained Prashanth Tapse, Senior VP Research analyst at Mehta Equities.
Following a relatively quiet phase in 2025, this rally signals a strong re-entry by investors betting on the government's unwavering focus on railways as a cornerstone of its infrastructure development agenda. Additionally, the recent rationalisation of passenger fares has been viewed positively, as it enhances revenue visibility for the entire railway ecosystem. Companies like IRCTC, which benefit from higher ticketing volumes and ancillary services, are seen as indirect beneficiaries of this improved passenger economics.
Expert Pick: Which Railway Stock to Consider?
Amid the ongoing rally, experts are identifying specific stocks with strong fundamentals. Prashanth Tapse of Mehta Equities recommends IRFC as a compelling buy for investors seeking exposure to India's multi-year railway expansion story. He has set a target price of ₹145 to ₹158 for the stock.
"As the dedicated financing arm of Indian Railways, one of the world’s largest rail networks, IRFC is a direct beneficiary of sustained government capex," Tapse noted. He highlighted the company's AAA credit rating, sovereign-linked profile, and predictable cash flows as factors that offer low-risk exposure to the sector's growth, supported by steady annuity-like earnings and potential for valuation re-rating.
Tapse further elaborated that strong order inflows, improved execution capabilities, and structural policy continuity are supporting earnings upgrades for key railway PSUs, which could lead to a long-term re-rating of the sector.
Disclaimer: This analysis is for informational purposes only. Readers are advised to consult with a certified investment advisor before making any financial decisions.
