For a populous country like India, the railways have always remained the most preferred commuting choice. As we are battling with the Covid-19 pandemic, the pace has certainly slowed down, but it is believed that more than 2.5 crore people use the Indian railway’s services every day. The present regime is on an aggressive path concerning revamping the Indian rail system. The world’s most extensive rail network system provides opportunities to investors with a medium-term to long-term outlook. We have selected three rail stocks that should generate decent returns for investors going forward.
1. Railtel Corp Of India Ltd (NS: RAIT )
Railtel Corporation is a government-owned company that provides internet services to the Indian railway to modernize train control operation and safety systems. It also offers the bandwidth to its customers and collaborates with Google (NASDAQ: GOOGL ) to provide WiFi services at selected railway stations. Presently, the company covers 93 leading cities, and its network passes through 5000 railway stations across the country. They are in planning to provide internet facility in train also. The stock was listed at Rs 109 in February 2021, generating a 16% premium over its issue price of Rs 94. Railtel has recently bagged two big orders worth Rs 23.43cr and Rs 119.72cr. It has a very healthy order book for the next five years. The company’s revenue has grown at a rate of 16.83%, which is higher than the industry’s average growth of 8.06% for the last five years. Net income growth at 6.74% is also above the industry average of 2.6%.
Covid-19 has forced businesses to go for digitalization at a faster rate. Railtel’s retail broadband services, VPN, video calling services have seen excellent traction. It is likely to continue in the future. The stock is currently trading at a 25.3% discount to its highest price of Rs 189.7 since listing.
2. Indian Railway Catering And Tourism Corp (NS: INIR )
IRCTC provides—online railway ticket booking services, catering services, and packaged drinking water services at stations. The Indian railway is coming up with new modern and faster trains which will have better hospitality services. It is the only company authorized by Indian railways to provide these services. The company has upgraded its user interface, which gives a better booking/cancelation experience to the customers.
Barring FY 20-21, which was hit by Covid -19 pandemic, IRCTC has posted a decent set of financials. Both revenue and profit have grown year on year. Net profit more than doubled in FY2020 to Rs 528.6 Crore over FY2017. Opening of train services, modernization of trains and coaches, and special trains such as Bharat Darshan, Char Dham Yatra should positively impact its topline going ahead. The stock delivered a 59.5% return in the last year. The share is hovering near its 52-week high of Rs 2248.0.
3. Indian Railway Finance Corp (NS: INID )
Indian Railway Finance Corporation Ltd (or IRFC) is the financing arm of the Indian railway. The company is registered as a Non-Banking Finance Company (or NBFC) with the Reserve Bank of India and engaged in the financing of rolling stock such as locomotive coaches, wagons, etc. The Indian railway is in expansion mode and also modernizing its present infrastructure. It will involve significant financing, and the operation of IRFC is bound to catch up with speed soon. It is also a rare funding NBFC with zero Non Performing Assets (or NPAs).
In FY2021, IRFC clocked a year-on-year 17% revenue growth and 38.3% rise in net profit. For five years ended in fiscal 2021, the company’s net income CAGR of 44.4% was above the industry average. The stock is trading at a 10.9% discount to its 52-week high of Rs 26.7, indicating an upward momentum ahead.
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is it advisable to buy irctc at current levels of 3300Like 0
good information sir, thanks and keep advisingLike 0
You doing great job sirLike 1
Agreed 👌Like 1
very good information and absolutely monopoly bussiness of these three companies in its segmentsLike 0