Indian Railway Stocks Surge as IRCTC & IRFC Gain Navratna Status; All 7 Listed Railway PSUs Upgraded

Indian Railway stocks surged up to 5% after IRCTC and IRFC were granted Navratna status, bringing the total number of listed railway PSUs with this designation to seven. This upgrade provides greater operational flexibility, allowing investments of up to ₹1,000 crore or 15% of net worth. Shares of RVNL, IRCON, IRFC, RailTel, RITES, IRCTC, and Concor saw gains. Brokerage ratings varied, with IDBI Capital giving a ‘buy’ on IRCTC and ‘sell’ on IRCON. IRCTC reported a turnover of ₹4,270 crore and a profit after tax of ₹1,111 crore in FY24. Railway CPSEs’ combined profit rose from ₹7,015 crore in FY21 to ₹11,780 crore in FY24.

Indian Railway Stocks Surge as IRCTC & IRFC Gain Navratna Status; All 7 Listed Railway PSUs Upgraded

Indian Railway stocks surged by up to 5% on Tuesday after Indian Railway Catering and Tourism Corporation Ltd (IRCTC) and Indian Railway Finance Corporation Ltd (IRFC) were granted Navratna status. With this upgrade, all seven listed railway PSUs now hold Navratna designation, as highlighted by the Union Railway Minister.

The government awards Navratna status to CPSEs that meet specific criteria, including a strong financial track record, performance indicators like net profit to net worth, and earning per share.

Shares of Rail Vikas Nigam Ltd (RVNL) rose 4.85% to ₹339.25, while IRCON International Ltd climbed 4.09% to ₹146.25. Despite this, IDBI Capital has a ‘sell’ rating on IRCON, targeting ₹143, while Antique Stock Broking suggests a ‘hold’ at ₹152 but a ‘sell’ for RVNL at ₹215.

IRFC shares gained 3.69% to ₹115.25, while RailTel Corporation of India Ltd advanced 3.08% to ₹285.75. RITES Ltd rose 2.65% to ₹203.70. IRCTC and Container Corporation of India Ltd (Concor) also gained around 1% each in early trade.

IDBI Capital has a ‘buy’ rating on IRCTC, setting a target price of ₹870 due to its strong Q3 performance. Prabhudas Lilladher, however, maintains a ‘hold’ rating at ₹809. Concor faces macroeconomic challenges, with Elara Capital downgrading it to ‘accumulate’ from ‘buy’ and adjusting the target price to ₹839.

On Monday, the central government granted Navratna PSU status to Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC), bringing the total number of listed railway CPSEs with this designation to seven. This status provides these entities with greater operational flexibility.

Among the 12 railway CPSEs, Concor, RVNL, IRCON, RITES, and RailTel had previously received Navratna classification. Railway Minister Ashwini Vaishnaw noted that since 2014, all seven listed railway CPSEs have been upgraded, with Concor being the first in July 2014.

Navratna companies can independently invest up to ₹1,000 crore or 15% of their net worth. IRCTC, which manages online railway ticket bookings and catering services, reported an annual turnover of ₹4,270 crore, a profit after tax of ₹1,111 crore, and a net worth of ₹3,230 crore for FY24.

According to the ministry, all railway CPSEs are profitable, with their combined profit rising from ₹7,015 crore in FY21 to ₹11,780 crore in FY24. This substantial growth highlights the strong financial health of these enterprises, driven by increased operational efficiency, strategic investments, and rising demand for railway infrastructure.

The Navratna status grants these CPSEs greater financial autonomy, allowing them to make independent investment decisions up to ₹1,000 crore or 15% of their net worth. This flexibility is expected to further accelerate expansion plans, enhance service quality, and improve profitability.

IRCTC, which plays a crucial role in railway ticketing and catering services, reported a net worth of ₹3,230 crore in FY24. IRFC, responsible for funding railway projects, has also seen strong financial growth. Analysts believe that with sustained government support and increasing infrastructure investments, railway PSUs will continue their upward trajectory, benefiting both investors and the broader economy.