Railway stocks have been on a strong upward trajectory, extending their rally for the fifth consecutive trading session, with shares of RVNL, IRFC, IRCON International, RailTel Corporation of India, and IRCTC witnessing sharp gains.
Over the last five sessions, Rail Vikas Nigam Ltd (RVNL) shares have jumped from around ₹306 to ₹387.25, registering a gain of over 26.5%. Indian Railway Finance Corporation (IRFC) shares climbed from ₹110.81 to ₹133.60, delivering more than 20% returns to investors during the same period.
Meanwhile, IRCON International stock surged from ₹150 to ₹178.25, logging an upside of nearly 19%. Shares of RailTel Corporation of India and Indian Railway Catering and Tourism Corporation (IRCTC) also saw strong buying interest as momentum picked up across railway-linked public sector undertakings (PSUs).
Why Are Railway Stocks Skyrocketing?
According to analysts, The sharp rise in railway stocks such as RVNL, IRFC and IRCON is driven by a shift in market sentiment rather than any fresh improvement in fundamentals. After correcting sharply over the past year due to valuation concerns, FII exits and margin pressures, the sector is now witnessing a revival in investor confidence, Expectations around pre-Budget activity, possible higher capital expenditure through gross budgetary support and market borrowings, and the likelihood of order acceleration are rebuilding confidence.
Passenger Fare Hike Lifts Sentiment
Another key trigger for the rally has been the second passenger fare hike in FY26, effective December 26, 2025.
According to analysts, although the hike is modest—around 1–2 paise per km, depending on travel class—it is expected to generate nearly ₹600 crore in incremental revenue during the current fiscal. This improves revenue visibility for Indian Railways and signals a gradual move towards better financial sustainability for the sector. The market has perceived this positively as it supports long-term earnings stability for rail-linked PSUs.
Budget 2026 in Focus
Pre-Budget expectations are also playing a crucial role in sustaining the rally. Investors are betting on continued policy support for railway-led infrastructure development in the Union Budget 2026.
Caution Advised for Investors
Despite the sharp rally, analysts urge caution. Analysts warned that the recent upmove appears largely sentiment- and expectation-led, rather than driven by immediate earnings upgrades. Many railway stocks underperformed through much of 2025, making them technically oversold and vulnerable to sharp relief rallies driven by bargain hunting. Over the long term, returns will depend on the actual scale of budgetary support, timely execution of projects, cash-flow discipline, and progress on fare rationalisation.
Investors are advised to focus on company-specific fundamentals and execution capability, rather than extrapolating short-term momentum.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Stock market investments are subject to market risks. Readers should consult their financial advisors before making investment decisions.
