Top 5 High Growth Railway Stocks in India 2024

Introduction

Hello everyone, how are you all? Today, we have brought you a highly requested video on railway stocks. In our previous videos, we discussed under-valued PSU stocks, book value stocks, and defense stocks. Now, we will focus on the growth share stocks of the Indian Railways. We will analyze the fundamentals and apply technical chart methods to identify potential investment opportunities. So, let's dive in and explore the top railway stocks in India.

IRFC: The Financial Hand of Indian Railways

IRFC (Indian Railway Finance Corporation) is a Mini Ratna category PSU company that operates under the Ministry of Railways. It is registered as an NBFC (Non-Banking Financial Company) and Infrastructure Finance Company with the RBI. IRFC plays a crucial role in financing railway projects and is considered the financial arm of Indian Railways.

When analyzing IRFC, it is important to consider its net interest margin (NIM) as it directly impacts the company's income. Currently, IRFC is maintaining a NIM above 1.40. Despite the challenges faced during the Covid-19 pandemic, IRFC has shown resilience and is expected to perform well in the future.

The government's focus on railway projects and the upcoming budget further support the growth potential of IRFC.

 

1-Technical Analysis of IRFC

Looking at the price action of IRFC, we can observe a pattern of upward movement followed by consolidation. This pattern indicates a healthy stock with periodic profit booking. It is important to note that no stock continuously moves upward and profit booking is a natural part of the market cycle.

Currently, IRFC is at a breakout level after consolidating for approximately 8 days. This breakout level presents a potential buying opportunity. By combining fundamental analysis with technical analysis, we can gain a comprehensive understanding of IRFC's growth potential.

2-Fundamental Analysis of IRFC

When analyzing the fundamental aspects of IRFC, we consider the industry P/E ratio, stock P/E ratio, and PG ratio. The industry P/E ratio is 16.2, while the stock P/E ratio is 32. This indicates that the stock is relatively expensive compared to the industry. However, the PG ratio of 1.27 suggests a decent valuation.

Furthermore, IRFC has shown consistent growth in net profit, especially when its order book has increased. This indicates a positive trend for the company and attracts investor confidence. The government currently holds a stake of 86.6%, and while there is no significant FII or DI position, it is important to consider the impact of government actions on the stock's performance.

 

 

NCC: Engineering Procurement and Construction Company

NCC is an EPC (Engineering Procurement and Construction) company that works on major projects such as road building and railways. It has direct connections with government entities like NHAI and RVNL. NCC's order book for railways is currently valued at over Rs. 9000 crores. Major clients include the Ministry of Railways, Delhi Metro, and Pune Metro.

Similar to other stocks, NCC experienced a decline in March but quickly recovered. It is important to understand that market fluctuations are a normal part of investing, and a long-term perspective is crucial. By focusing on the company's fundamentals and market strength, short-term market movements should not cause panic.

1-Technical Analysis of NCC

When analyzing the technical chart of NCC, we can observe a similar pattern of upward movement followed by consolidation. This pattern indicates a healthy stock with periodic profit booking. As of now, NCC is approaching a breakout level, which presents a potential buying opportunity.

2-Fundamental Analysis of NCC

The fundamental analysis of NCC reveals a stock P/E ratio of 25.5, which is relatively cheaper compared to the industry P/E ratio of 38.9. The PG ratio of 1.07 suggests a decent valuation. Additionally, NCC has shown improvement in net profit, indicating a positive trend for the company. Promoters hold a stake of 22%, while FII and DII positions are at 23.8% and 10.52%, respectively.

 

 

IRCTC: The Monopoly Share of Railways

IRCTC (Indian Railway Catering and Tourism Corporation) is a PSO (Public Sector Undertaking) company that provides catering and tourism services for Indian Railways. IRCTC is a one-stop solution for travel and tourism, offering ticket booking, catering, and drinking water services.

In terms of technical analysis, IRCTC has shown a breakout from previous levels and is currently trading above the support level. This breakout presents a potential buying opportunity. It is important to note that market fluctuations in March should not be a cause for concern. By analyzing the company's fundamentals and market strength, investors can make informed decisions.

Fundamental Analysis of IRCTC

In terms of fundamental analysis, IRCTC has a stock P/E ratio of 70.6, which is relatively expensive compared to the industry P/E ratio of 0.6. The PG ratio of 2.02 indicates an expensive valuation. However, the company has shown improvement in operating profit margin and net profit, which is a positive sign. Promoters hold a stake of 62.4%, while FII and DII positions are at 7.34% and 11.9%, respectively.

 

 

JWL: The Coach Maker

JWL (Jupiter Wagons Limited) is a company that manufactures railway wagons and coaches. It plays a crucial role in the transportation of goods and heavy containers for the railway sector. JWL generates approximately 70% of its revenue from the railway sector.

Similar to other stocks, JWL experienced a decline in March but quickly recovered. By analyzing the technical chart, we can identify potential buying opportunities based on breakout levels. By combining technical analysis with fundamental analysis, investors can make informed decisions.

Fundamental Analysis of JWL

The fundamental analysis of JWL reveals a stock P/E ratio of 59.5, which is relatively cheaper compared to the industry P/E ratio of 36.1. The PG ratio of 1.49 suggests a decent valuation. JWL has shown improvement in operating profit margin, indicating an upward trend. Promoters hold a stake of 70%, while FII and DII positions are at 1.26% and close to 6%, respectively.

RVNL: Railway Projects and Beyond

RVNL (Rail Vikas Nigam Limited) is a PSU company that works on railway projects such as new line construction, electrification, and multi-tracking. It operates on an agreement basis with the Ministry of Railways and has an impressive order book of approximately Rs. 9000 crores.

Like other railway stocks, RVNL experienced a decline in March but quickly recovered. By analyzing the technical chart, we can identify potential buying opportunities based on breakout levels. By considering the fundamentals and market dynamics, investors can make informed decisions.

Fundamental Analysis of RVNL

In terms of fundamental analysis, RVNL has a stock P/E ratio of 17, which is relatively cheaper compared to the industry P/E ratio of 37.8. The PG ratio of 1.87 suggests a slightly expensive valuation. RVNL has shown improvement in net profit and attracts significant interest from promoters, FIIs, and DIIs.

 

 

Conclusion

Investing in railway stocks can be a lucrative opportunity, considering the growth potential of the Indian Railways. By analyzing the fundamentals and applying technical analysis, investors can identify potential buying opportunities and make informed investment decisions.

It is important to remember that market fluctuations are natural and should not cause panic. A long-term perspective, combined with a thorough understanding of the company's fundamentals, will help investors navigate through market cycles and achieve their financial goals.