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Mint
2 days ago
- Business
- Mint
Amrit Bharat boost: Stocks to benefit from station modernisation
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. Also Read: Four stocks to watch as India's space economy eyes $44 billion by 2033 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. Also Read: Four fast-growing space stocks to add to your watchlist 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. Also Read: This luggage leader is staging a turnaround. But can it overcome its baggage? 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. Also Read: Trent's 1,000% rally takes a breather. Can a Sensex rejig revive its fortunes? 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
Mint
5 days ago
- Business
- Mint
Can this railway stock manage the risks while chasing long-term growth?
Indian railway makeover is no longer a dream; it's a full-blown mission. And right at the heart of this infrastructure push is Rail Vikas Nigam Ltd (RVNL), the government arm for the mega rail projects. From electrification and track doubling to station revamps and even metro rail expansions, RVNL is quietly doing the heavy lifting for the Indian Railway's future. But here's the real question: Is RVNL just riding the PSU hype train, or does it genuinely have the steam to compound wealth long-term? In this piece, we decode the RVNL business model, its financials and much more. About RVNL Incorporated in 2003 under the ministry of railways (MoR), RVNL was set up with a clear mandate to accelerate the implementation of critical railway infrastructure projects. Acting as the MoR's primary construction arm, RVNL today is responsible for building new railway lines, electrification, major bridges, workshops, and even metro and urban transport systems. The company has mastered leveraging extra-budgetary resources, especially through the formation of Special Purpose Vehicles (SPVs), reinforcing its ability to mobilise capital beyond traditional government allocations. Its consistent performance earned it Miniratna Category-I status, a recognition that conferred greater operational autonomy. But the real game-changer came in April 2023, when RVNL was awarded the Navratna status. This recognition has not only boosted its financial independence but has strategically positioned the company to compete for larger, more complex infrastructure projects. What has RVNL built? Here's a quick overview of what makes the company a silent force in India's infrastructure story: Revenue Model of RVNL RVNL primarily earns through EPC (Engineering, Procurement, and Construction) contracts, but what's interesting is its evolving model. While EPC accounted for more than 80% of revenue, the rest comes from the project management consultancy (PMC) and other high-margin services. Fees typically range from 8.5-10%, depending on the project type, and the company is actively transitioning from nomination-based to competitive bidding models. RVNL is intricately tied to India's macro-infra goals, particularly the PM Gati Shakti National Master Plan. Competitive Landscape: Key Peers RVNL operates in a competitive environment, with key peers including: From multi-modal logistics parks (MMLPs) to streamlining freight corridors, RVNL's contributions go far beyond laying tracks, it's building India's next-gen logistics and trade infrastructure. Over the last five years, the company has demonstrated a strong and consistent growth trajectory. Turnover has grown steadily, at a compound annual growth rate (CAGR) of 10.6%. Net profit has also expanded impressively to ₹14,630 million (m) in FY24, nearly doubling in five years. It is supported by stable operating margins and a controlled cost structure. The operating profit margin has remained steady at 6%, indicating consistency in operational efficiency despite scaling up. The growing earnings per share (EPS) highlights the company's growing profitability on a per-share basis. This improvement in share also reflects management's effective capital deployment. The balanced dividend payout suggests how the company rewards its shareholders while also retaining profits for future growth. Apart from the strong financials, RVNL will significantly benefit from powerful structural drivers shaping the Indian infrastructure landscape. Sectoral Tailwinds: Railway Infrastructure Boom in India Key Growth Drivers of RVNL Risks Investors Should Know While RVNL presents a compelling growth story, investors must consider several inherent risks associated with it. Conclusion RVNL isn't laying tracks anymore, it's laying the groundwork for a bigger infra story. With strong PSU roots and expanding beyond railways, the potential is real. But new sectors bring new challenges. The real game is balancing smart diversification. Before taking any financial decision, investors should check if the stock aligns with their investment objectives or not. Match the opportunity with the risks. 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
