In the backdrop of robust September-quarter earnings and strong order inflow with ongoing transformation in the railway sector, public sector undertakings (PSUs) — Rail Vikas Nigam Ltd, RailTel Corporation of India Ltd, and Indian Railway Finance Corporation Ltd (IRFC) — hit a new 52-week high on Wednesday.
As the announcements of September-quarter earnings come to an end, IRFC, RailTel Corporation of India, and Rail Vikas Nigam have closed with stellar performances.
IRFC reported its July-September earnings with a 14 percent on-year rise in its net profit to ₹1,714 crore while Rail Vikas Nigam for the September quarter reported a 36.52 percent on-year jump in its net profit to ₹381.22 crore. RailTel Corporation of India saw a 113.69 percent surge in its net profit sequentially during the quarter.
According to analysts, these PSUs have seen buying interest because of attractive valuations. They believe that the railway stocks have been in momentum since last week, and generally, these stocks tend to move higher from November ahead of budget in February.
Deven Choksey, Managing Director of KR Choksey, believes that the budget would take care of the growth aspect as far as railways are concerned, and the number of freight corridors can be further increased. As of today, we have six freight corridors coming underway in the country.
“The main reasons for the railway PSU pack to surge is that the government plans to monetise land, increase freight corridor that is generating a higher amount of demand, and also give independent status to these PSUs to run the operations by independent professional management,” he said.
The shares of RailTel Corporation of India rose more than 25 percent during the previous month, whereas Rail Vikas Nigam shares increased more than 55 percent during that same period.
Rail Vikas Nigam has gained 118.45 percent from its 52-week low of ₹29.0, RailTel Corporation of India has gained 64.88 percent from its 52-week low of ₹84.0, and IRFC has gained 40.93 percent from the 52-week low of 19.3.
Today, on the BSE, shares of RailTel Corporation of India closed up nearly 2 percent at ₹138. 30 per share, Rail Vikas Nigam closed at ₹63.70 per share, up nearly 5 percent, and IRFC closed at ₹26.95 per share, up nearly 7 percent.
Three analysts polled by MintGenie strongly recommend buying Rail Vikas Nigam while an equal number of analysts gave a ‘strong buy’ call on RailTel Corporation of India as well.