Amrit Bharat boost: Stocks to benefit from station modernisation

Mint

6 days ago

For FY25, Indian Railways allocated ₹12,994 crore for 'customer amenities". This includes funding for station redevelopment projects like the Amrit Bharat Station Scheme (ABSS).
The scheme intends to upgrade and modernise over 1,300 stations across the country. It involves creating master plans and executing them in phases to enhance various station facilities, including station accessibility, waiting areas, toilets, lift and escalator installations, free Wi-Fi, kiosks for local products through initiatives like 'One Station, One Product', passenger information systems, executive lounges, spaces for business meetings, landscaping, and unique requirements of each station.
With a vision to transform railway stations into vibrant urban centres, the state-run companies in the railway sector will play a crucial role, making them attractive for long-term investors.
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This article highlights a few stocks that will benefit from Indian Railways' Amrit Bharat Station Scheme.
Have a look...
Ircon International Ltd
Ircon International Ltd (IRCON) commenced its business in 1976 as a railway construction company. It was awarded the Navratna status by the department of public enterprises, ministry of finance, in October 2023.
It offers comprehensive project management and consultancy (PMC) services from planning to commissioning in the entire spectrum of projects for the construction of railway sidings, highways, railways, and roads over bridges, buildings, etc.
Ircon's service portfolio includes engineering, procurement, and construction (EPC) services, which align with the ABSS mission to modernise 1,300 railway stations across India.
The company has completed about 400 infrastructure projects in India and 128 projects in 25 countries globally, including Iran, Iraq, Jordan, Turkey, Malaysia, Nigeria, Brazil, etc.
It has a huge client base, including NHAI, BHEL, Delhi Metro, Indian Oil, NTPC, NMDC, Power Grid Corporation of India, Nigerian Railway, Bangladesh Railway, Zambia Railways, etc.
Recently, the company has secured a contract of ₹253 crore from South Western Railway for the implementation of KAVACH, an indigenous train collision avoidance system.
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Its revenue grew at a compounded annual growth rate (CAGR) of 32.1% over the past three years, while its net profit grew at a CAGR of 33.5%.
The company maintained strong financial health, with an average RoE of 14.4% and RoCE of 17.3%.
Rail Vikas Nigam Ltd
Incorporated in 2003 by the Government of India, it is engaged in the business of implementing various types of rail infrastructure projects assigned by the ministry of railways (MoR).
This includes doubling, gauge conversion, new lines, railway electrification, major bridges, workshops, production units and sharing of freight revenue with the railways as per the concession agreement with the MoR.
Anticipated turnover for the coming years is projected at ₹ ₹28,000-30,000 crore annually, with a gestation period of three to four years for project execution.
Infrastructure projects like Thiruvananthapuram Central Railway Station redevelopment, worth ₹439 crore and electrification projects of the Southern Railway, worth ₹143 crore, are a demonstration of RVNL's capability to handle large-scale infrastructure developments.
This makes the company a strong contender for future ABSS-related assignments.
In Q4 FY25, RVNL secured new orders worth ₹6,600 crore, bringing the total order inflow for FY25 to ₹13,700 crore.
Indian Railway Finance Corp. Ltd (IRFC)
Incorporated in 1986, IRFC borrows funds from the financial markets to finance the acquisition/creation of assets, which are then leased out to Indian Railways as a finance lease.
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It is the funding arm of Indian Railways, which provides loans to various companies working in the sector, such as RVNL, Konkan Railway Corp. Ltd, IRCON, RailTel Corp. of India Ltd, Pipavav Railway Corp. Ltd, etc.
The company is exploring opportunities to invest in railway infrastructure projects, including dedicated freight lines, high-speed rail corridors, and multi-modal logistics parks.
The company received the Navratna status in FY25 and is working towards Maharatna status.
Recently, the company secured government approval to raise up to ₹10,000 crore for its infrastructure projects through deep-discount bonds.
Its revenue grew at a CAGR of 19.1% over the past three years, while its net profit grew at a CAGR of 13.2%.
The company maintained strong financial health, with an average RoE of 13.9%.
RailTel Corp. of India
Incorporated in 2000, the company creates nationwide broadband and VPN services, telecom, and multimedia networks to modernise Indian Railways' train control operation and safety system.
It is a Navratna public sector undertaking and one of the largest neutral telecom infrastructure providers in India, owning a pan-India optic fibre cable network (OFC), which can serve up to 70% of the country's population. Its RailWire broadband service has over 580,000 subscribers.
It has executed critical projects of national importance such as BharatNet, National Knowledge Network (NKN), railway signalling, etc.
The ABSS emphasises the enhancement of passenger amenities, including the provision of free Wi-Fi, digital signage, and advanced information systems. RailTel, with its extensive optical fiber network covering is well-positioned to implement and manage these digital services.
Its revenue grew at a CAGR of 23.1% over the past three years, while its net profit grew at a CAGR of 20%.
The company maintained strong financial health, with an average RoE of 12.9% and RoCE of 18%.
Conclusion
The ABSS scheme offers a unique opportunity to strengthen the role of these railway PSUs in India's rail infrastructure growth.
IRCON and RVNL will gain through increased project execution, construction, and engineering opportunities.
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IRFC will gain through supporting the large-scale financing needs of Indian Railways' expanding asset base.
RailTel will play a key role in providing the digital backbone, smart station technologies, and passenger connectivity services.
However, one factor to keep in mind is that any change in budget priorities, political shifts, or delays in project approvals can directly hit their financials.
Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock before making any investment decisions.
Happy Investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.