Railway stocks have been on a firm track this year, with select counters rising as much as 40 per cent since the Rail Budget and up to 240 per cent since Railway Minister Suresh Prabhu assumed office on November 9, 2014 amid optimism that the government-led infrastructure push in the sector will keep the health of related companies in the pink of health. The Finance Ministry recently gave nod to a proposal to merge the rail budget with the general Budget, i.e. there may not be a separate Rail Budget from FY18. The news, though, has failed to put the brakes on rail stocks, which have performed well since the annual budget on February 27, thanks to swift project approvals.
Railway stocks in uptrend Hind Ractifiers is ruling at Rs 86, up 40 per cent from Rs 61 level hit on the day of Rail Budget. Pitti Lamination has surged 37 per cent, while Timken India has climbed 31 per cent in the same period. Shares of Titagarh Wagons are up 28 per cent while Hercules Hoists and Siemens have jumped 27 per cent each since the budget. Kernex Microsys, BEML, Stone India, Texmaco Rail and Kalindee Rail have advanced up to 20 per cent during the same period. Ever since Prabhu assumed office, shares of MIC Electronics have surged 239 per cent, those of Titagarh Wagons 127 per cent, BEML 58 per cent, Siemens 43 per cent and Hind rectifiers 43 per cent. shares of Kernex Microsys and Hercules Hoists fell 33 per cent and 14 per cent during the period. A total of 12 rail-linked stocks have seen 25 per cent jump in market value since budget and 43 per cent during Prabhu's tenure so far.
The Cabinet Committee on Economic Affairs (CCEA) recently cleared 1,937 km of railway projects worth Rs 24,375 crore across nine states. In his rail budget 2016-17, Prabhu increased the capital outlay for the world's fourth largest rail network by 21 per cent YoY to Rs 1.21 lakh crore. To accomplish his vision, Prabhu has announced investment of $140 million over next five years to improve the infrastructure and mobility of services. He is in advanced stage of finalising a proposal to create a $5 billion fund to finance various infrastructure projects. Due to insufficient capital, expansion of infrastructure and capacity augmentation did not happen for a long time