Budget 2024: Multibagger Railway Stocks Dip Up to 8% – Here’s Why IRFC, RVNL, IRCTC Took a Hit | Buzzing News

In today’s trading session, railway stocks, known for their strong past performance, saw significant declines. This happened because the Union Budget 2024-2025 did not focus much on the railway sector. Investors had expected major funding for railways, but Finance Minister Nirmala Sitharaman’s budget speech barely mentioned it, causing stock values to drop.

Ircon International Shares

Ircon International shares fell 8% to ₹293.25 each. Other railway stocks like Rail Vikas Nigam, Indian Railway Finance Corporation, RailTel Corporation of India, and Indian Railway Catering & Tourism Corporation also saw declines between 3.3% and 6.2%.

Despite today’s drop, these stocks have still gained over 100% in the past year. The government has previously prioritized the railway sector with significant funding. Investors had hoped this trend would continue with the new budget.

Union Budget

The Union Budget 2024-2025 focuses on nine key areas: agriculture, employment, human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms.

Finance Minister Nirmala Sitharaman mentioned that the budget aims to create many opportunities for everyone. She said, “In the interim budget, we promised a detailed roadmap for ‘Viksit Bharat.’ This budget outlines our continued efforts in nine key areas.”

Modernizing

Over the past decade, the Indian government has been working to modernize the railway system. This includes expanding metro networks in several cities and introducing ‘Vande Bharat’ trains starting in 2019.

In FY24, Indian Railways set records for producing both locomotives and wagons. By March 2024, they had launched 51 pairs of Vande Bharat trains. The Indian Railways 2023 report outlines plans to market these semi-high-speed trains to Europe, South America, and East Asia by 2025-26, promoting ‘Made in India’ trains internationally.

Fourth-Largest Network Globally

Indian Railways, with a network of over 68,584 kilometers as of March 31, 2024, is the fourth-largest network globally under single management. Capital expenditure on railways has increased by 77% over the past five years. The interim budget for 2024 allocated ₹2.62 lakh crore for investments in new lines, gauge conversions, and track doubling, according to the Economic Survey report.

Various Initiatives

Significant initiatives include the Amrit Bharat Station Scheme, launched in 2023 to continuously upgrade stations, with 1,324 stations identified for development. Additionally, two dedicated freight corridors (DFCs) are in progress: the Eastern DFC, spanning 1,337 kilometers, and the Western DFC, extending 1,506 kilometers.

The Dedicated Freight Corridor Corporation (DFCC) aims to increase the railway freight share in logistics from 27% to 45% by 2030. Annual freight carriage is projected to increase from 1,400 million tonnes (MT) to 3,000 MT by 2027, with the wagon fleet expanding from 336,900 to 500,000.