Railway Budget 2018: Railway shares subdued ahead of Budget; PSU stocks in focus but may not see much action

By: | Updated: January 30, 2018 2:03 PM

Budget 2018: With only two days left for Railway Budget 2018 -- a component of the Union Budget itself from 2017 onwards, a subdued movement had been observed in most of the railway-related private and public sector shares. Over the course of last 1 month, most of the railway shares have seen a falling trend.

PSU stocks related to Indian Railways will be in focus, when Finance Minister Arun Jaitley presents the Union Budget 2018 on 1 February 2018.Budget 2018: Shares of PSU company BEML may see some action when Finance Minister Arun Jaitley presents Railway Budget 2018 on 1 February 2018. (Image: Reuters)

Budget 2018: With only two days left for Railway Budget 2018 — a component of the Union Budget itself from 2017 onwards, a subdued movement had been observed in most of the railway-related private and public sector shares. On the other hand, some PSU stocks related to Indian Railways will be in focus, when Finance Minister Arun Jaitley presents the Union Budget 2018 on 1 February 2018. Over the course of last one month, most of the railway shares have seen a falling trend including the blue-chip PSU stock BEML. The stock of BEML has dropped 8.8% to Rs 1,457.95 while shares of wagon manufacturer Texmaco Rail and Engineering have dived 7.24% to Rs 104.35.

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The Railway Budget 2018 may be favourable for metro projects, Vaishali Parekh, Technical Research Head, Prabhudas Lilladher, said to FE Online. Shares of BEML, Siemens and Reliance Infrastructure may gain on the back of this, she said, adding that these three stocks are also technically well placed. Shares of PSU company BEML may see some action when Finance Minister Arun Jaitley presents Railway Budget 2018 on 1 February 2018.

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BEML supplies equipment to Indian Railways including integral railway coaches, overhead electric inspection cars, postal vans, utility track vehicles, track laying equipment, broad-gauge railbus etc. Other shares related to railways are Gateway Distriparks, Kernex Microsystems, Titagarh Wagons, L&T, ABB, and Siemens. Since the last one month of trading, the stock of Titagarh Wagons had shed nearly 3% while the shares of ADAG’s Reliance Infrastructure had fallen 11% to Rs 509.7. 

Last 1-month performance of railway-related stocks

Stock Rise/Fall(%) Price (Rs)
Kernex Microsystems 21.86 56.3
ABB 15.87 1,621.80
L&T 13.58 1,431.95
Siemens 4.03 1,288.05
Gateway Distriparks -1.43 234.5

As Finance Minister Arun Jaitley looks to give a boost to infrastructure and railways, ace investor Porinju Veliyath sees opportunity in stocks like Titagarh Wagons and Texmaco Rail & Engineering. “In the infra sector, if you look at the government spending and the upcoming projects, the larger projects and government’s vision — the railway stocks have not moved up much. Even Titagarh Wagons has moved a little — 30-40%. Texmaco is almost at the same price. I am holding both the stocks and they are not big performers but I feel there can be a game-changing kind of development for these companies going forward,” Porinju Veliyath told ET Now.

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Sharing why he’s bullish in the railway sector, Porinju Veliyath said, “Looking at the big picture, the way government is planning to transform the railways, it is a huge task. It is a very large organisation and we need to upgrade and we need to spend huge money on railways because looking at our demography and the way we can develop it for the economic growth, if railways and the coastal seaways are properly managed, that can make our Indian economy grow higher. That is the kind of opportunities we are sitting on. This needs a large amount of capital outlay and the biggest benefit India is accruing from the recent reforms.”

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