India’s railway sector is entering a period of sustained expansion. The network plays a crucial role in passenger travel, freight movement and economic activity. According to the India Brand Equity Foundation (IBEF), India is projected to account for 40% of global rail activity by 2050.
The sector is also benefiting from higher government spending and a strong order pipeline. IBEF expects railway companies’ revenue to grow by 5% in FY26, with operating margins of around 12%. This growth is supported by a government capital outlay of Rs 2.5 lakh crore. The sector also has an order book-to-income ratio of 2.8 times. This spending cycle has placed several railway stocks linked to India’s infrastructure push in focus.
Against this backdrop, we look at India’s cheapest railway stocks based on enterprise value to EBITDA, or EV/EBITDA. The ratio compares a company’s total operating value with its operating earnings. It is useful for railway companies because they are capital-intensive and may carry different levels of debt. EV/EBITDA makes these differences easier to compare.
We started with a list of companies whose core business is linked to railway equipment, infrastructure and services. Railway-financing companies and other non-core businesses were excluded. We then considered companies with a market capitalisation of more than Rs 5,000 crore. From this group, we selected the three stocks trading at the lowest EV/EBITDA multiples.
#1 Ircon International: Moderate Returns Meet FY27 Execution Delays
Ircon International commenced its business in 1976 as a railway construction company, it diversified progressively since 1985 as an integrated engineering and construction PSU specialising in large and technologically complex infrastructure projects in various sectors such as railways, highways, etc.
Ircon International Financial Performance
| Metric | Value |
| EV/EBITDA | 10.0x |
| FY26 revenue growth | -14.6% |
| FY26 net profit growth | -18.2% |
| Order book | ₹24,984 crore |
| RoCE | 9.7% |
| RoE | 9.2% |
Trading at 10.0x EV/EBITDA: Moderate Multiples vs FY26 Profit Contraction
The railway engineering company trades at an EV/EBITDA multiple of 10 times. This is above the peer median of 9.6 times. It is also above its own five-year median of 9.4 times.
The company has not yet declared its results for the first quarter of FY27. For FY26, Ircon reported total revenue of Rs 9,502 crore in FY26. This was 14.6% lower than Rs 11,131 crore in the previous year. Net profit fell 18.2% year-on-year (YoY) to Rs 592 crore.
Replace the two long order-related paragraphs with this sharper version
Ircon ended FY26 with an order book of Rs 24,984 crore. This was close to 2.6 times its annual revenue. Domestic projects formed 92% of the order book. Competitive orders formed 54%, while nomination-based work made up the rest.
The company secured orders worth around Rs 5,000 crore during FY26. It also submitted 107 bids worth nearly Rs 48,000 crore under evaluation at the time of the Q4 earnings call. The opportunities cover railway electrification, signalling, telecom, Kavach, tunnels, bridges and civil construction. Ircon is also watching the proposed freight corridor.
FY27 Investment and Overseas Operations
Ircon plans to invest around Rs 400-500 crore in its public-private partnership projects during FY27. The spending will largely cover road projects and coal-connectivity railway projects. It also expects routine capital expenditure of Rs 50-60 crore for machinery and other requirements.
Internationally, the company was executing projects in Algeria, Myanmar and Nepal. It had completed a project in Bangladesh and was undertaking smaller works in Sri Lanka and Malaysia. Management said international projects generally carry better margins. Completion gains from Bangladesh, improved profitability in Algeria and foreign-exchange benefits supported overseas earnings. However, land availability continued to affect progress on some projects in Nepal.
Competitive Bidding Risks: Margin Pressure Across the ₹24,984 Crore Order Pipeline
The valuation discount reflects visible concerns. Revenue and profit declined in FY26. Execution was affected by delays in land handover and client clearances. Competition has also become sharper. Some railway bids are being submitted below estimated prices. Management expects standalone core EBITDA margins to remain around 4-4.5%.
Ircon has guided for FY27 revenue to remain close to FY26 levels. The order book offers medium-term visibility, but a clear recovery depends on faster execution and fresh order wins. Its 9.7% return on capital employed (RoCE)and 9.2% return on equity (RoE) are also moderate. The stock is cheaper than its peers, but its current multiple remains above its historical average.
Below is the 5-year EV/EBITDA chart of Ircon International.
Ircon International 5-Year EV/EBITDA Chart
#2 RITES: High RoCE Offset by Low-Margin Turnkey Mix
Established in 1974, RITES is a public sector enterprise and a leading player in the transport consultancy and engineering sector in India, having diversified services and geographical reach. The company is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia).
Rites Financial Performance
| Metric | Value |
| EV/EBITDA | 11.1x |
| FY26 revenue growth | 9.7% |
| FY26 net profit growth | 7.1% |
| Order book | ₹9,416 crore |
| RoCE | 22.0% |
| RoE | 15.4% |
Trading at 11.1x EV/EBITDA: Modest Valuation Premium Supported by 22% RoCE
RITES trades at an EV/EBITDA multiple of 11.1 times. This is above its five-year median of 10.6 times. It is also higher than the peer median of 9.6 times. The stock, therefore, trades at a modest premium to both benchmarks.
The company has not yet declared its results for the first quarter of FY27. For FY26 its consolidated revenue rose 9.7% YoY to Rs 2,525 crore. Net profit increased 7.1% YoY to Rs 454 crore.
Growth was spread across consultancy, leasing and exports. Turnkey construction was the exception. Revenue from this segment fell by around Rs 200 crore during the year. The company also completed the export of 10 locomotives to Mozambique. This helped export revenue cross Rs 300 crore after a gap of nearly two years.
Young Order Book Moves Into Execution
RITES ended FY26 with its highest-ever order book of Rs 9,416 crore. More than half of it was secured during the previous 12-18 months and should contribute more meanginfully in FY27. The Rs 4,580-crore turnkey order book includes building projects for IITs and IIMs. It also covers rail infrastructure and siding projects.
RITES had an export order balance of around Rs 1,750 crore. The largest project covers 200 passenger coaches for Bangladesh. The first 20-coach rake was expected to be dispatched in FY27, followed by at least two or three more rakes.
RITES is also converting used Indian Railways diesel locomotives to for African markets. Prototypes for the first two locomotives were ready. The broader order covers around 30 locomotives.
Turnkey Expansion vs Profitability: Why a Changing Business Mix Caps Bottom-Line Growth
Management expects FY27 revenue to grow and is aiming for a new record. Profit is also expected to rise. However, it may not reach the company’s earlier peak. This is because a larger share of revenue will come from turnkey and competitively awarded projects. These carry lower margins. Competitive orders make up 63% of the order book and more than 70% of recent inflows.
This changing business mix helps explain why the valuation remains contained despite a healthy 22% RoCE and 15.4% RoE. The company has guided for EBITDA and net profit margins to remain above 20% and 15%, respectively. The order book supports growth, but delivery schedules and the shift towards lower-margin work will decide how much of that growth reaches the bottom line.
Below is the 5-year EV/EBITDA chart of RITES.
RITES 5-Year EV/EBITDA Chart
#3 Railtel Corporation of India: 22.8% RoCE Meets Telecom-to-Project Margin Dilution
RailTel Corporation of India was incorporated in 2000, with the objective of creating nationwide broadband and VPN services, telecom, and multimedia network, to modernize the train control operation and safety system of Indian Railways.
Railtel Corporation of India Financial Performance
| Metric | Value |
| EV/EBITDA | 12.8x |
| Q1 FY27 revenue growth | 20.1% |
| Q1 FY27 net profit growth | -0.5% |
| Order book | ₹11,466 crore |
| RoCE | 22.8% |
| RoE | 17.1% |
Trading at 12.8x EV/EBITDA: Historic Valuation Discount vs Peer Group Realities
It trades at an EV/EBITDA multiple of 12.8 times. This is below its five-year median of 15.6 times. However, it is higher than the peer median of 8.2 times. The stock is therefore cheaper than its historical valuation, but not against the broader peer group.
RailTel started FY27 with strong revenue growth. Revenue from operations rose 20.1% YoY to Rs 893.3 crore in the June quarter. It stood at Rs 743.8 crore a year earlier. Net profit, however, slipped 0.5% to Rs 65.8 crore from Rs 66.1 crore.
Telecom vs Low-Margin Projects: Decoding RailTel’s Q1 FY27 Profitability Trade-Off
The difference came from the changing business mix. Project revenue increased 30.2% to Rs 532.5 crore. Telecom services revenue grew 7.8% to Rs 360.8 crore. Project contracts carry thinner margins than telecom services. This meant that higher revenue did not result in similar profit growth.
Its order book stood at Rs 11,466 crore as of April 30, 2026 up 34% higher from December 2025. Railway projects accounted for around 21% of the order book. Management expects the project business to generate revenue of Rs 3,000-3,500 crore in FY27.
The company is executing three Kavach railway safety orders. These will be completed over the next two to three years. However, management had not seen fresh Kavach tenders from Indian Railways at the time of the May earnings call. The company is also commissioning a video-surveillance project for the railways. Connectivity provided for the surveillance network will generate recurring telecom revenue.
Expanding the Edge: Data Centre Capex as the Next Operational Growth Catalyst
Data centres are emerging as RailTel’s next growth area. Revenue from this business rose to Rs 202 crore in FY26 from Rs 127 crore a year earlier. Its customers include the central government, state governments, public-sector companies and Indian Railways. Railway applications such as e-office and the hospital management information system are hosted on RailTel’s infrastructure.
RailTel commissioned smaller data centres in Gurugram and Mumbai during FY26. It planned three more locations during FY27. These include Indore, Ujjain, Chandigarh and Visakhapatnam, although the final combination could change. Owned capacity is expected to rise from around 3 megawatts to 5 megawatts by May 2027.
The company has budgeted capital expenditure of around Rs 300 crore for FY27. Most of this will go towards data centres. The balance will support the telecom network and smaller infrastructure requirements.
What Could Hold Back a Re-Rating?
RailTel’s valuation discount to its historical multiple reflects some clear risks. The faster-growing project segment operates at margins of only 4-5%. Project execution can also be uneven across quarters. Data centre expansion requires capital, while demand for smaller edge facilities has developed more slowly than expected.
The company’s 22.8% RoCE and 17.1% RoE remain healthy. Its order book also provides visibility. However, the Q1 results show that revenue growth alone is not enough. The next leg of performance will depend on margin protection, project execution and the pace at which data centre investments begin contributing to profit.
Below is the 5-year EV/EBITDA chart of Railtel Corporation of India.
Railtel Corporation of India 5-Year EV/EBITDA Chart
The Broader Horizon: Three Additional Railway Stocks Trading Below 20x EV/EBITDA
Container Corporation of India was next at 16.3 times EV/EBITDA. Its earnings are driven by rail-based container transport, terminal operations and logistics services.
IRCTC followed at 19 times EV/EBITDA. Its business spans railway ticketing, catering, tourism and packaged drinking water.
Ramkrishna Forgings traded at 19.3 times EV/EBITDA. Its railway exposure comes from forged components and the supply of train wheels, alongside its automotive and industrial businesses.
Conclusion
India’s railway sector has plenty of work ahead. Government spending remains strong and companies have healthy order books. But orders alone do not guarantee growth. Projects must be completed on time and without putting too much pressure on margins.
The three stocks covered here are the cheapest railway plays from our selected list. Yet, a low EV/EBITDA does not automatically make a stock attractive. In some cases, the lower valuation may reflect slower execution, falling profits or tough competition.
Investors should check the quality of the order book, margins, cash flows and returns on capital. The better pick may not always be the cheapest one. It is the company that can turn its orders into revenue and profit without taking unnecessary risks.
India’s Cheapest Railway Stocks
| Metric | Ircon International | RITES | RailTel Corporation |
| EV/EBITDA | 10.0x | 11.1x | 12.8x |
| Five-year median EV/EBITDA | 9.4x | 10.6x | 15.6x |
| Latest order book | ₹24,984 crore | ₹9,416 crore | ₹11,466 crore |
| RoCE | 9.7% | 22.0% | 22.8% |
| RoE | 9.2% | 15.4% | 17.1% |
You can track how these are progressing by adding stocks to your watchlist.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep dive into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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