Shares of Rail Vikas Nigam Limited (RVNL), a key player in railway infrastructure, extended their winning streak for the fourth consecutive trading session on Wednesday, December 24. The stock surged even as the broader market indices showed limited movement.
Stock Momentum and Price Action
The RVNL share price opened at ₹344 on the BSE, higher than its previous closing price of ₹341.85. It maintained strong momentum during early trade, climbing to an intraday peak of ₹349.40 per share. This marked the stock's highest level since the beginning of October 2024. The four-day rally has resulted in a cumulative gain of 14.2% for the railway PSU.
This upward movement represents a significant shift in sentiment for railway stocks, which had been under pressure for an extended period. The turnaround is largely attributed to a recent government announcement regarding passenger fares.
Government's Fare Rationalisation Drive
The central government has implemented a revised fare structure aimed at improving the financial health of Indian Railways. Effective from Friday, December 26, the new rates are designed to balance rising operational costs while attempting to cushion the impact on passengers.
Under the new policy:
- Ordinary-class fares for journeys exceeding 215 kilometers will increase by one paise per kilometer.
- Mail and Express non-AC categories, along with all AC classes, will see a uniform increase of two paise per kilometer.
This is the second such fare adjustment in the current fiscal year, following a previous hike on July 1, 2025. The move is expected to generate approximately ₹600 crore in additional revenue for the railways in the remaining part of FY2025. Passenger services currently run at a significant loss, with fares subsidised by freight earnings and priced about 45% below the actual cost of operations.
Analysts suggest this fare rationalisation, ahead of the Union Budget for FY2027, will help Indian Railways improve its operating ratio, which is projected to be 98.43% for this fiscal year.
Order Wins and Long-Term Performance
Beyond the fare hike, recent contract awards have also bolstered investor confidence in RVNL. Last week, the company secured a Letter of Award from the Northeastern Railway. The project involves the construction of the substructure for Important Bridge No. 50, featuring a double D-type well foundation for a double line over the River Gandak between Paniyahwa.
Examining the stock's trajectory, RVNL's share price has declined nearly 46% since reaching its all-time high of ₹647 in July 2024. Despite the recent recovery, the stock is still down about 18% on a year-to-date basis and is on track for its first annual decline since its listing in 2019.
However, the long-term picture for RVNL remains robust. The stock has delivered gains of nearly 450% over the past two years and an impressive 1,400% over the last five-year period, highlighting its sustained growth story despite recent volatility.
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