IRFC, RVNL Lead Railway Stock Gains

Railway stocks extended their rally for the fifth consecutive session on Friday, December 26, driven by multiple market factors. Investor interest in the sector has surged following the government’s revised passenger train fares and anticipations surrounding upcoming policy announcements. A combination of pre-Budget positioning, sector rotation, and renewed optimism is fueling this upward momentum.

Key Performers in the Railway Sector

RVNL emerged as one of the biggest gainers, with its stock soaring 12.30% to ₹388.20. Other notable performers included RailTel and IRFC, both climbing nearly 9%, while IRCTC shares increased by around 5% to ₹704 per share. These gains highlight renewed investor confidence in railway-related equities.

Drivers Behind the Rally

Pre-Budget Optimism

A significant catalyst for the current rally is the anticipation of the Union Budget 2026. Historically, railway stocks attract increased investor interest before the Budget as markets expect higher capital allocation toward infrastructure, network upgrades, and expansion of rolling stock.

Passenger Fare Rationalisation

The recent adjustments in railway passenger fares have further strengthened market sentiment. Even modest fare hikes are seen positively, providing better revenue visibility across the railways ecosystem. Companies like IRCTC, which benefit from ticketing volumes, catering, and other ancillary services, stand to gain indirectly from improved passenger economics despite their otherwise defensive profiles.

Sector Fundamentals and Policy Continuity

According to Prashanth Tapse, Senior VP Research at Mehta Equities, railway stocks are benefiting from higher expected budgetary allocations, faster project execution—including station redevelopment, electrification, Vande Bharat trains, and dedicated freight corridors. Strong order inflows, enhanced revenue visibility, improved delivery, operational leverage, and balance-sheet strength of key railway PSUs support earnings upgrades, while consistent policy measures boost long-term return expectations and potential sector re-rating.

Investment Opportunities Amid the Rally

IRFC: A Strong Infrastructure-Finance Play

Tapse recommends IRFC as a promising buy, with a target price of ₹145–₹158. As the dedicated financing arm of Indian Railways, IRFC is positioned to benefit from sustained government capital expenditure on rolling stock, electrification, freight corridors, and capacity expansion. Its AAA credit rating, sovereign-linked profile, predictable cash flows, and strong asset quality make it a low-risk investment option with potential for valuation re-rating as financing volumes and execution improve.

RailTel: Technical Strength Signals Short-Term Gains

Drumil Vithlani, Technical Research Analyst at Bonanza, highlights RailTel Corp as an attractive option for investors. The stock recently broke out of a Falling Wedge pattern on the daily chart, suggesting a short-term bullish trend. Volume expansion during the breakout indicates strong buyer participation, while a confirmed weekly breakout could pave the way for a broader medium-term rally.

Conclusion

With positive pre-Budget sentiment, fare rationalisation, and supportive sector fundamentals, railway stocks are demonstrating robust performance. Investors focusing on key players like IRFC and RailTel may find attractive opportunities amid this ongoing momentum, benefiting from both long-term infrastructure growth and short-term technical strength.

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Sorit Chaudhary

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