The Railway Industry has been one of the crucial sectors in India since 1862. It is a key driver of the nation’s economic growth, as it connects major cities serving other sectors such as Manufacturing, Agriculture, Mining, Tourism, and Logistics. It benefits industries as well as common people by transporting passengers and cargo goods on a large scale at a low cost. With an affluent history of modernization, expansion, and technological advancements, railway stocks attract investors due to their stable returns and growth potential.

Through this article, we will provide insight into the best railway stocks in India for those investors who are wondering which railway stocks to buy. 

Railway Industry in India

The Indian railway is the 4th largest rail network in the world after the US, China, and Russia which has a length of 62,119 kilometers. Railway networks are considered as one of the best modes for long-distance travel and transport of bulk goods. Under single management, Indian railways are catering to millions of passengers and industries at a low cost, Since the central government runs it. 

Indian Railways' total revenue was at Rs. 2.40 lakh crore (US$ 28.75 billion) in FY24. An increase in the number of passengers boosted the figures to 648 crore while freight loading fell by a whisker to 1,500 MT from 1,512 MT last year. The railways transported 1,434.03 MT of freight between April and February, which was an increase of 66.51 MT over the same period last year and added revenues of approximately US$ 778 million, or Rs 6,468 crore. Since August 2020, Indian Railways has also run 450 Kisan Rail services that transported more than 1.45 lakh tonnes of agri produce and perishables.

The Indian government has been quite prompt in its investment in railway infrastructure through investor-friendly policies and the encouragement of FDI to enhance freight and high-speed train capabilities. RailTel supports this initiative by providing fast and free Wi-Fi across stations, which resonates with the commitment taken by the government towards modernizing the rail network and bringing improvement in services. Due to this government focus, investors are attracted to railway stocks in India.

Best Railway Stocks List 2024

Now that we've gone through the industry overview, let’s check out the top railway stocks in India, including both PSU and non-PSU stocks.

Note: These railway stocks are ranked by market capitalization. Please analyze thoroughly before investing, as key metrics recorded on Sep 09, 2024, may vary daily.

Best Railway Stocks in India - Overview

Here is the overview of top railway shares in India

1) IRFC

Indian Railway Finance Corporation (IRFC) is one of the top railway sector stocks. The company operates under the Ministry of Railways and was established on 12th December 1986. It is a Schedule 'A' Public Sector Enterprise (PSU) and is also registered with the Reserve Bank of India as NBFC-ND-SI and NBFC-IFC.

In essence, IRFC's main operations and products involve raising funds from domestic and international markets for the financing of the acquisition or creation of assets for Indian Railways and subsequently leasing them back to support railway expansion.

As of 31st March 2022, IRFC has financed more than Rs. 5.04 lakh crore for the purchase of Locomotives, Coaches, and Wagons, which involve about 75% of the rolling stock fleet. The Company also lends to Companies like RVNL.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 2,51,320 Cr

• Debt-to-Equity Ratio (DE): 8.38

• P/E Ratio: 39.2

• Return on Equity (ROE): 13.60%

• Dividend Yield: 0.78%

• Current Market Price (CMP): Rs. 192

2) IRCTC

Indian Railway Catering and Tourism Corporation Ltd. was incorporated on September 27, 1999, as a "Mini Ratna (Category-I)" Central Public Sector Enterprise. It functions under the Ministry of Railways, Government of India, having a registered corporate office in New Delhi.

The major operations and products of IRCTC include catering and hospitality services at stations and on trains, internet ticketing, tourism through budget hotels, tour packages, and global reservation systems, and processing of packaged drinking water branded as Rail Neer.

The Company has fourteen Rail Neer plants and eleven base kitchens in India. It has five zonal offices, ten regional offices, and specialized ticketing and tourism offices, making it one of the largest rail catering and tourism infrastructures in the country.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 77,296 Cr

• Debt-to-Equity Ratio (DE): 0.02

• P/E Ratio: 67

• Return on Equity (ROE): 40.40%

• Dividend Yield: 0.57%

• Current Market Price (CMP): Rs. 966

3) Rail Vikas Nigam Ltd

Rail Vikas Nigam Limited (RVNL) is one of the top railway infrastructure stocks. The company was established on 24th January 2003, as the dream of Bharat Ratna Late Shri Atal Bihari Vajpayee to overcome infrastructure gaps in Indian Railways. It was formally dedicated to the nation as a part of the National Rail Vikas Yojana (NRVY).

RVNL's main operations and products relate to the development and execution of rail infrastructure projects, mobilization of financial and human resources, and encouragement of PPPs. It forms Special Purpose Vehicles for specific projects and takes care of cost-effective and timely delivery. It also has several training institutions intended to manage railway finance and related programs

RVNL raises funds from different sources and manages the commercialization of projects. It also uses Build-Operate-Transfer models to generate revenue.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 1,23,005 Cr

• Debt-to-Equity Ratio (DE): 0.77

• P/E Ratio: 84.1

• Return on Equity (ROE): 20.40%

• Dividend Yield: 0.36%

• Current Market Price (CMP): Rs. 590

4) Titagarh Rail Systems Ltd

Titagarh was formed in 1977, and from the very beginning, it has been a leading mobility solution provider with state-of-the-art factories in India and Italy. The company pioneered the manufacturing of passenger and freight rolling stock.

Specializing in semi–high-speed trains, urban metros, passenger coaches, and specialized wagons, the company also manufactures propulsion systems in partnership with ABB, giving it an excellent track record in rail and freight systems.

The other diversified arms of Titagarh include shipbuilding and defense. Merger with the corporate shipyard has enhanced its capabilities. It has a 50-acre shipyard near Kolkata, which is processing more than 10,000 tons of steel every year.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 20,146 Cr

• Debt-to-Equity Ratio (DE): 0.07

• P/E Ratio: 68.6

• Return on Equity (ROE): 18.10%

• Dividend Yield: 0.03%

• Current Market Price (CMP): Rs. 1,498

5) BEML Ltd

BEML Limited, formerly Bharat Earth Movers Limited, was incorporated in May 1964 and is based in Bangalore. It is a Public Sector Undertaking (PSU) under the Ministry of Defence, India, and listed on both the BSE and NSE.

Its main operations and products include rail coaches, spares, mining equipment, and metro cars. It functions across three verticals: Mining & Construction, Defence, and Rail & Metro, which is spread over nine manufacturing units in India.

BEML has supplied more than 18,000 passenger coaches and 900 EMUs to Indian Railways. It also offers self-propelled equipment and maintenance vehicles; it has contributed immensely to India's metro systems.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 18,441 Cr

• Debt-to-Equity Ratio (DE): 0.03

• P/E Ratio: 65.4

• Return on Equity (ROE): 11.10%

• Dividend Yield: 0.23%

• Current Market Price (CMP): Rs. 4,435

6) Container Corporation of India Ltd (CONCOR)

Container Corporation of India, engaged in logistics and transportation Services was incorporated in 1988 by taking over the existing network of 7 inland container depots(ICDs) from Indian railways. It is now a market leader with the largest network of 66 ICDs. It offers services including inland rail transport for containers, as well as the management of ports and air cargo complexes.

CONCORE's core business operations are categorized into three major activities: transporting containers by rail and road, operating terminals, and managing warehouses.

The company owns 64 terminals and purchased 7200 container flat wagons from Indian Railways.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 62,640 Cr

• Debt-to-Equity Ratio (DE): 0.08

• P/E Ratio: 49.7

• Return on Equity (ROE): 10.90%

• Dividend Yield: 1.07%

• Current Market Price (CMP): Rs. 1,030

7) Jupiter Wagons Ltd

Jupiter Wagons, formerly CEBBCO (Commercial Engineers and Body Builders Corporations), manufactures metal fabrications for commercial vehicles, rail freight wagons, and components.

The products sold by the company range from shipping containers to skip-loaders, garbage-bin collectors, and even troop carrier vehicle bodies. Their major clients are from the mining sector, railway sector, road construction, and defense. Tata Motors, Mahindra & Mahindra, and the Ministry of Defense are its important customers.

More than that, Jupiter Wagons's high productivity benefits from its 200-acre land bank, which has access to low-cost power. It has a well-built factory infrastructure with two 15-tonne electric arc furnaces and the most modern CNC machining centers.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 25,865 Cr

• Debt-to-Equity Ratio (DE): 0.21

• P/E Ratio: 72.2

• Return on Equity (ROE): 27.40%

• Dividend Yield: 0.08%

• Current Market Price (CMP): Rs. 609

8) Ircon International Ltd

Ircon International Limited is a premier public sector construction company, which was incorporated on April 28, 1976, under the Ministry of Railways. Its headquarters is in India with operations having stretched across Malaysia, Nepal, and Bangladesh.

IRCON works in railway and highway construction, EHP sub-stations, and MRTS. It has built over 300 infrastructural projects in India besides more than 100 other projects across the globe, which covers the entire spectrum of construction activities.

It includes the New Rail Coach Factory in Raebareli, and several contracts for the Kochi Metro Rail project, etc. The areas of their expertise extend from building station buildings, bridges, tunnels, railway electrification, etc.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 26,927 Cr

• Debt-to-Equity Ratio (DE): 0.44

• P/E Ratio: 29

• Return on Equity (ROE): 16.80%

• Dividend Yield: 1.05%

• Current Market Price (CMP): Rs. 286

9) RITES

RITES Limited is a Navratna and Schedule 'A' Central Public Sector Enterprise under the Ministry of Railways, incorporated on April 26, 1974. This multi-disciplinary engineering and consultancy organization provides expertise in transport infrastructure and related technologies.

RITES is outstandingly prominent in railway, highway, metro, and airport projects and has completed over 5000 assignments worldwide. Infrastructure studies, engineering services, rolling stock design, railway equipment services, signaling and telecommunication, electrical engineering, and other services are in the company's lineup.

It is ranked among the top 500 listed companies in India by market capitalization. RITES has remained the preferred choice in more than 55 countries for rolling stock, consultancy, and engineering services.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 17,367 Cr

• Debt-to-Equity Ratio (DE): 0

• P/E Ratio: 40.7

• Return on Equity (ROE): 17.50%

• Dividend Yield: 2.84%

• Current Market Price (CMP): Rs. 723

10) Railtel Corporations

RailTel was incorporated on September 26, 2000. It is a "Mini Ratna (Category-I)" Central Public Sector Enterprise. It is one of the largest neutral telecom infrastructure providers in India, with a Pan-India optic fiber network covering over 61,000 kilometers and over 6108 railway stations.

RailTel has modernized Telecom Systems for Train Control and Safety, and also provides Broadband Services, and Connectivity Projects for Indian Railways. This encompasses Wi-Fi in major Railway Stations, IP-based Video Surveillance, e-office Services, and Hospital Management Information Systems.

It also participates in national initiatives, like Bharatnet and National Knowledge Network, aimed at inter-linking panchayats and institutions of higher learning through high-speed broadband and WiFi services.

Here is an overview of the company's fundamentals:

• Market Cap: Rs. 16,123 Cr

• Debt-to-Equity Ratio (DE): 0.02

• P/E Ratio: 60.4

• Return on Equity (ROE): 15.20%

• Dividend Yield: 0.57%

• Current Market Price (CMP): Rs. 502

Factors to Consider Before Investing in Railway Stocks in India

Now that we have discussed the company overview, let’s check out the things to consider before investing in the best railway stocks in India.

Government Policies

Being one of the high government policy-dominated sectors, one needs to be updated with infrastructure-related developments, tariffs, privatization processes, budget allocation, and so on before investing railway related stocks.

Financial Performance

Consider the growth in revenues, degree of indebtedness, profitability, and other financial metrics before making investments. Certain railway companies are heavily indebted and are vulnerable to interest rate risk and debt servicing.

Growth Potential

Keep watching the technological advancement in this sector, such as automation, digitalization, and electrification, and how they bring improvements in terms of safety, efficiency, and cost-effectiveness.

Estimate Demand

Base your estimate of demand for passenger and freight transportation on variables like growth in population, industrial activity, and trade volumes.

Risks Evaluation

The railway sector remains exposed to regulatory risk, operational risk, geopolitical risk, and tough competition from road and air transport, consider these before investing in railway stocks in India.

Industry Cycle

The railway sector is cyclical. Align your investment timing with the industry cycle and be prepared for the associated risks.

Valuation

Notably, railway share prices are currently trading at relatively subdued valuations, hence offering a very good entry point. However, valuations change fast; hence, one must keep a close watch. 

Note: Investment Horizon Railway stocks are considered long-term investments and are meant for steady growth over time. One should be ready to hold on to the investments for the long term.

How to Invest in the Best Railway Stocks in India

Follow the Steps for Investing in Railway Stocks in India:

• Set up your investment goals by determining your financial objectives and risk tolerance. 

• Choose railway stocks in NSE or BSE by researching the various stocks available, comparing ratios, and looking over their past performance. 

• Open Demat account and trading account through a trusted stockbroker

• Fund your account by transferring money via a bank transfer,  or any other method provided.

• Buy the top Indian railway stocks by looking up the investment returns and placing a buy order for the number of stocks you want to purchase.

• Monitor your investment by regularly checking its performance and rebalancing your portfolio if necessary. Stick with your plan, and stay the course by avoiding emotional decisions.

Conclusion

Indian Railway stocks have high long-term growth potential and provide stable returns due to its strong infrastructure, government support, and modernization efforts. Top picks such as Indian Railway Finance Corporation Ltd, Rail Vikas Nigam Ltd, and Indian Railway Catering & Tourism Corporation Ltd show robust financial performance. Investors must consider government policies, financial health, and market risks before investing in some of the best railway stocks in India.