Rites Share Price: Shares of Rites, RailTel, IRFC, Texmaco Infrastructure & Holdings Ltd and Titagarh Rail Systems Ltd extended gains on June 5. Rites share price has gained nearly 14 per cent in four straight sessions to trade at Rs 316 on the NSE. Shares of RailTel rallied over 13 per cent for the second straight day to trade at Rs 398.95 apiece on the NSE. IRFC (Indian Railway Finance Corporation Ltd) share price gained for the second straight day. The stock is trading over 2 per cent higher at Rs 148 apiece on the NSE.
Other rail sector stocks such as Texmaco Infrastructure and Titagarh Rail also extended gains. Shares of Texamco Infrastructure rallied more than 13 per cent to trade at Rs 110.4 apiece and shares of Titagarh Rail Systems gained for the second straight day, trading higher by over 5 per cent at Rs 943.2 apiece on the NSE.
Why Are Rail Stocks Rallying
The rally seen in railway sector-linked stocks comes on the back of new order announcements by companies such as Rites and RailTel. The recent order wins by the two companies are likely to have boosted investor sentiment regarding rail sector stocks.
Rites Ltd informed the exchanges via a filing on June 3 that it has emerged as the lowest bidder (L-1) in the financial bid for a Quality and Cost-Based Selection (QCBS) tender floated by Gujarat Urban Development Company Ltd. The company added that the estimated value of the bid is Rs. 28.50 crore excluding GST. The company added that the timeline for the project is sixty months from the date of issue of Letter of Award.
RailTel informed the exchanges on June 5 that it has received a Letter of Intent (LOI) from Motor Vehicles Department, Maharashtra. As a part of the order RailTel will design, implement, operate and maintain Intelligent Traffic Management System (ITMS) on several vulnerable spots in the Vidarbha Circle for a period of 10 years. The company also mentioned in the filing that the estimated size of the order is Rs. 274.40 crore.
Ajit Mishra – SVP, Research, Religare Broking Ltd told Outlook Money that railway sector stocks have extended gains on the back of strong positive sentiment and rotational buying.
"Railway sector stocks have extended their gains, driven by strong positive sentiment in the broader market. Additionally, rotational buying across key infrastructure themes is contributing to the bullish momentum," Mishra said.
Apart from the order wins, expectations of government support in the form of higher capital expenditure have also contributed to the rally. Notably, the capital expenditure (capex) allocation for railways for FY 2025-26 was fixed at Rs. 2.55 lakh crore, which is higher than 1.19 per cent compared to the FY 2024-25 budget of Rs. 2.52 lakh crore. Additionally, robust GDP growth numbers have also added to the positive sentiment around the rail sector and contributed to the rally.
Mishra urged investors to remain selective and focus on stocks that have relatively higher strength within the railway sector.
"Most railway stocks are witnessing a reversal after spending nearly a year in a corrective phase and remain approximately 40 per cent to 60 per cent below their record highs. This suggests that the recovery may still have room to extend. However, participants should remain selective and focus on stocks that are showing relatively higher strength within the sector—especially for short-term trades," Mishra said.
Mishra also advised investors to adopt a positive yet cautious approach towards railway stocks considering a moderation in government capex allocations to the sector.
"Investors should adopt a positive yet cautious approach toward railway stocks, considering the possibility of moderation in government budget allocations and the relatively expensive valuations. It is also important to monitor the companies’ order books and their execution capabilities, as these will be critical for sustaining earnings visibility," Mishra said.
At the time of writing shares of RailTel shares traded at Rs 442.75 apiece on the NSE up by 0.16 per cent, shares of Rites Ltd traded higher by Rs 304.6 apiece up by 3.06 per cent, shares of IRFC traded higher by Rs 145.7 apiece on the NSE up by 0.52 per cent. Texmaco Infrastructure & Holdings Ltd and Titagarh Rail Systems Ltd shares also traded higher by up to 3.43 per cent.
