RVNL shares surged 10% after securing Rs. 115.79 crore order from Central Railway

On Friday, the shares of Rail Vikas Nigam Limited (RVNL) surged around 10 percent on NSE after recently it secured an order worth Rs. 115.79 crore from Central Railway. The order involves the upgradation of the existing 1x25 KV electric traction system to a 2x25 KV system at the feeding system in the Itarsi-Amla section of the Nagpur Division. This contract aims to meet a 3000 MT loading target and is scheduled to be executed over 24 months.

The recent surge in RVNL’s stock price is part of a broader rally in Public Sector Undertaking (PSU) stocks, which has been driven by several factors beyond just defence sector gains. PSU stocks, including those in railways, have attracted renewed investor interest due to positive market sentiment, attractive valuations after recent corrections, and strong government support. Market analysts highlight that PSU stocks fit well into a long-term value investment theme, supported by structural economic changes and government reforms.

Railway stocks, including RVNL, have benefitted for several reasons. Strong quarterly results from related companies like RailTel and RITES have boosted investor confidence. For instance, RailTel had reported a 46 percent year-on-year jump in net profit and a 57 percent increase in net sales for the March 2025 quarter, while RITES posted a record order book of Rs. 8,877 crore. Additionally, Indian Railway Finance Corporation (IRFC) has received board approval to raise up to Rs. 60,000 crore in FY26 to fund expansion plans, signalling long-term growth prospects.

Further, Government policy and budgetary support might also have played a crucial role in the railway stocks rally. Recently, the Union Cabinet’s approval of major railway projects worth thousands of crores has renewed investor confidence. The government’s budget allocation for railway infrastructure is Rs. 2.52 lakh crore in FY 2025–26.

The railway sector’s stock rally is further supported by attractive valuations following a correction from the highs seen in 2024. Many railway PSU stocks are now trading at reasonable price-to-earnings ratios, which might have drawn investors interest on PSU companies. The combination of strong order books, government backing, and improving operational performance might have created a positive market sentiment around railway PSUs.

In summary, RVNL’s recent Rs. 115.79 crore order win for electric traction system upgradation from Central Railway, along with robust quarterly earnings reports of its peers, recent government approvals of major projects, and a favourable macroeconomic environment, might have fueled a surge in railway PSU stocks. The broader PSU stock rally, can be driven by attractive valuations and government reforms that can extend beyond defence to railways, making these stocks compelling for long-term investors. The government capex spending on infrastructure development and the importance of railways is always at the forefront of India’s growth story.