Before we get started with our article on Railway Stocks In India, did you know that India operates the oldest working steam engine in the world?
Named the “Fairy Queen”, the locomotive is 164 years old, having been operational since the Colonial British rule in India. It has been revived for use by the Loco Works in 2010.
The Indian Railways is one of the largest in the world, employing over 1.4 million people. This also makes the Indian railways the largest employer in the country.
In this article, we’re going to cover the Indian Railways industry and have a brief look at the top railway stocks in India.
Railway Industry India Overview
The railways have a rich history in India. The first railway line ran for just 21 miles, connecting Bombay and Thane. The project was an idea of George Clark, the chief engineer of the Bombay Government in 1843.
The importance of railways in the development of India has always been a matter of interest. It employs millions of people, and for the most part, it is mainly owned and operated by the Government of India.
The government has been planning to privatize the railway industry, like the maintenance and ticketing solutions. Now, let’s read about the top railway stocks in India!
Top Railway Stocks In India – Table
|S. No.||Company Name||Market Cap (Rs. In Cr.)||CMP|
|3||Container Corporation Of India||37858.51||621.35|
|4||Rail Vikas Nigam Ltd||15064.34||72.25|
The Indian Railways industry is either completely controlled by the government or is dominated by a few companies. IRCTC is one such railway stock, that has monopolized the entire Indian Railways network.
According to IRCTC’s financial statements, they are the only entity with authority from the Indian government to provide online ticketing services, catering services, and packaged drinking water in India.
Now you might argue that you can still buy train tickets online on other websites too. For other online ticket booking platforms to sell train tickets online, they need to be authorized by IRCTC.
The company was founded in 1999 and is a mini-Ratna central public sector enterprise.
Financial Performance Of IRCTC
|CMP||₹ 637||Market Cap (Cr.)||₹ 50,984 Cr.|
|EPS||₹ 11.2||Stock P/E||56.8|
|Face Value||₹ 2.00||Book Value||₹ 28.0|
|Promoter Holding||62.4%||Price to Book Value||22.8|
|Debt to Equity||0.08||Dividend Yield||0.55 %|
|Net Profit Margin||35.5 %||Operating Profit Margin||41.0 %|
IRCTC is a large-cap mini-Ratna company. It has a market capitalization of ₹50,984 crores, making it one of the biggest listed railway stocks in India. The company has had phenomenal growth since listing in late 2019.
In the financial year ending FY 2022, they posted sales of ₹1,879 crores, out of which they generated an operating profit of ₹881 crores.
That is a phenomenal OPM of 47 percent. FY 2022 was also the best year for the company in terms of net profits, clocking in ₹664 crores.
To compare, the company’s best revenue figure was FY 2020, with sales worth ₹2,264 crores, but profits were ₹513 crores. The company has significantly improved its operating profit margin over the years.
With an ROE of 39.9 percent and ROCE of 51.3 percent, it is one of the best-performing railway stocks in India.
This can be attributed to the fact that IRCTC is a monopoly stock, with complete control over the online ticketing and catering business of the Indian railways.
Additionally, they have managed to stay virtually debt free, with a D/E ratio of just 0.08.
Coming to the shareholding pattern, promoters (The Government Of India) own 62.4 percent of IRCTC.
While this is a good figure overall, it is notable that the promoters have sold a 5 percent stake over the September 2022 quarter and they previously held over 87 percent of the company until September 2020.
Since listing in October 2019, the railway stock has given an amazing return of 310 percent. An investment made in IRCTC of just ₹1,00,000 would be worth around ₹3.10 lakhs today.
The Indian Railway Finance Corporation is a government entity, created for the purpose of financing the various projects of the Indian Railways.
This involves setting up infrastructure, purchasing locomotives and coaches, and so on. Keeping the railways operational in India is quite capital-intensive, given that we have one of the largest railway industries in the world.
To keep such a massive system running requires capital and to maintain the funding and acquisition for new projects, the IRFC was created in 1986.
The company raises funds to lend to the Ministry Of Railways and other railway entities such as Rail Vikas Nigam Ltd.
Financial Performance Of IRFC
|CMP||₹ 29.9||Market Cap (Cr.)||₹ 39,075 Cr.|
|EPS||₹ 4.94||Stock P/E||6.05|
|ROCE||5.11 %||ROE||15.8 %|
|Face Value||₹ 10.0||Book Value||₹ 33.3|
|Promoter Holding||86.4 %||Price to Book Value||0.9|
|Pledged Percentage||0%||Dividend Yield||4.69 %|
|Net Profit Margin||30.0 %||Operating Profit Margin||99.3 %|
IRFC is the 2nd largest railway stock in India, having a market capitalization of ₹39,075 crores. The company largely deals with financing for railway projects and is a government enterprise under the Ministry of Railways.
FY 2022 was the best performance year for the company – both in terms of sales as well as net profits. They clocked in revenues of ₹20,299 crores and net profits of ₹6,090 crores.
5 years prior, they were able to achieve a net profit of ₹2,055 crores from revenues of ₹9,267 crores.
The company has an ideal ROE of 15.8 percent but its ROCE is on the low side at 5.11 percent. The current market price of IRFC is ₹29.9 per share, with a P/E of 6.05.
This is slightly higher than that of its industry P/E of 4.89. Promoters of IRFC – The Ministry Of Railways own a huge stake in the company – 86.4 percent.
The company was only recently listed in 2021. Since listing, it has given a return of 21.77 percent in a matter of two years.
3. Container Corporation Of India
Besides passenger transport, railways are also used for cargo/commercial transport. In fact, faster transportation of goods is one of the main reasons for the expansion of railways in India.
These railway cargo shipments are transported in containers. CONCOR is engaged in the business of providing transportation of containers by railway lines. Like most railway stocks in India, CONCOR is an undertaking by the Government of India.
Financial Performance Of Container Corporation Of India
|CMP||₹ 614||Market Cap (Cr.)||₹ 37,414 Cr.|
|EPS||₹ 18.9||Stock P/E||32.5|
|ROCE||13.0 %||ROE||10.0 %|
|Face Value||₹ 5.00||Book Value||₹ 181|
|Promoter Holding||54.8 %||Price to Book Value||3.41|
|Debt to Equity||0.07||Dividend Yield||1.45 %|
|Net Profit Margin||13.7 %||Operating Profit Margin||22.8 %|
CONCOR posted record-high revenues in FY 2022 (₹7,653 crores), its highest in the past ten years. The company’s operating profit margin for the year was 23 percent, on par with its FY 2018 margins.
They earned net profits of ₹1,052 crores in FY 2022, over double that of FY 2021 (₹501 crores). However, the company posted higher profits with lower sales in FY2019 (₹1,222 crores) and FY2018 (₹1060 crores).
The company’s ROE (10 percent) and ROCE (13 percent) are average and within the ideal range of 10-15 percent. They have managed to stay debt free, which is a healthy sign for the government-owned company.
Promoters of CONCOR own just above half of the company at 54.8 percent. There hasn’t been major selling or buying of stakes by the promoters anytime recently. In 5 years, CONCOR shares have given a below-expected return of just 17 percent.
4. Rail Vikas Nigam Ltd.
RVNL was created based on an initiative by former prime minister Atal Bihari Vajpayee. The initiative was to bridge the infrastructure deficit for Indian railways, under which the National Rail Vikas Yojana was announced in 2002.
After three years, the company began operations in 2005. RVNL operates and maintains different railway projects throughout the country, and is also given authority to raise funds for said projects from banks and other financial institutions.
Financial Performance Of RVNL
|CMP||₹ 73.5||Market Cap (Cr.)||₹ 15,325 Cr.|
|EPS||₹ 6.48||Stock P/E||11.3|
|ROCE||16.8 %||ROE||19.7 %|
|Face Value||₹ 10.0||Book Value||₹ 33.7|
|Promoter Holding||78.2 %||Price to Book Value||2.18|
|Debt to Equity||0.91||Dividend Yield||2.45 %|
|Net Profit Margin||6.10 %||Operating Profit Margin||6.30 %|
Rail Vikas Nigam is a mid-cap railway stock, under the Ministry of Railways in India. RVNL posted revenues of ₹19,382 crores in FY 2022, which is almost twice their FY 2019 figures (₹10,069 crores).
The company has maintained a steady OPM of 5-6 percent in the past 5 years. The company is also profitable, steadily growing profits over the years. The latest annual profits for FY2022 were ₹1,183 crores, close to double that of FY 2018 (₹688 crores).
But FY2022 also includes an additional income of ₹904 crores which makes its way down to the overall net profits of the year. The company’s ROE (19.7 percent) and ROCE (16.8 percent) are quite positive and above the ideal range.
The company has a D/E ratio of 0.91, well within the acceptable range. Promoters AKA the Government Of India own 78.2 percent of RVNL.
In the past two years, the government has sold almost 9 percent of its holding (previously it was 87.8 percent). RVNL is one of the best-performing railway stocks in India, giving a multi-bagger return of 272 percent in just 5 years.
RITES stands for Rail India Technical and Economic Service Ltd. The company is a subsidiary of the Ministry Of Railways and was incorporated in 1974.
RITES is an engineering company and also a transport consultancy. It is the only exporter of the Indian railways for rolling stock, excluding Indonesia, Thailand, and Malaysia. The company was only recently listed in July 2018.
Financial Performance Of RITES
|CMP||₹ 333||Market Cap (Cr.)||₹ 8,013 Cr.|
|EPS||₹ 22.7||Stock P/E||14.7|
|ROCE||30.2 %||ROE||21.1 %|
|Face Value||₹ 10.0||Book Value||₹ 107|
|Promoter Holding||72.2 %||Price to Book Value||3.1|
|Debt to Equity||0||Dividend Yield||5.10 %|
|Net Profit Margin||20.2 %||Operating Profit Margin||27.1 %|
We’ve officially entered the small-cap category of our railway stocks in India with RITES. The MoR company is a small-cap railway stock with a market capitalization of ₹8,013 crores.
The company made ₹2,662 crores in revenue as of FY 2022. That turned into a net profit of ₹539 crores for the same year. The company has maintained an operating profit margin of 27-29 percent in the past 5 years.
The company has phenomenal ROE (21.1 percent) and ROCE (30.2 percent) within its industry. Another plus sign is the company’s debt-to-equity ratio, which is virtually zero.
Promoters own a 72 percent stake in the company, and there hasn’t been any significant movement recently.
RITES has given a return of 111.3 percent in 5 years, well over doubling your money and making it the third multi-bagger railway stock in this article.
As of now, the railway industry is majorly controlled by the Government of India, although there have been plans to divest and give private players slight control as well.
We have also added a table including other major railway stocks in India for your reference. For more such stock-related knowledge, check out the courses at Join Fingrad!
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