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The railway stocks have outrun most sectors at the bourses in the last year. The stocks have taken its investors on an incredible ride, so is it time to deboard, or get more tickets?

Many believe the stocks might be getting too expensive. RVNL, IRFC and IRCTC all trade at record-high PE ratios. RVNL now trades at a PE of 44x, whereas IRCTC and IRFC trade at PEs of 77x and 36x respectively. Private players like Titagarh and Texmaco are also on the same track. Titagarh trades at a PE ratio of 62, while Texmaco Rail’s PE is at 101.

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But the stocks are not slowing down. The latest impetus to their golden run is the expectations of another blockbuster budget. Analysts from Prabhudas Lilladher, Icra, Elara Capital, and Care Edge all anticipate a boost in capital expenditure in the upcoming budget.

The consensus estimates peg the capital allocation for railways to jump up 20-25% to around ₹3 lakh crore. Multi-year projects such as the Vande Bharat trains, the Kwach Project, and the Middle East Rail Corridor further bolster investor confidence.

RVNL, BHEL, and Titagarh are involved in the manufacturing of the Vande Bharat trains and are expected to benefit heavily from further expansion. Kernex Microsystems and HBL Power Systems are expected to cash in with the expansion of the Kwach railway protection project. 

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