Surge in Indian railway stocks contrasts growth prospects, Kotak Institutional says

Railtel of India

06/06/2025 10:08

** Steep rise in Indian railway stocks in past few weeks contrasts government's flat FY26 capex projection and modest medium-term outlook, says Kotak Institutional Equities

** Attributes stock boost to euphoria in mid- and small-caps and rub-off effect from other sectors like defence, manufacturing and electrification

** Jupiter Wagons JUWL.NS, RITES RITS.NS and RailTel Corporation of India RAIT.NS down 1.9%, 2.9% and 3.8%, respectively, today after brokerage commentary

** However, JUWL, RITS and RAIT still up 15%, 37% and 56%, respectively, since May

** Other stocks like IRCON International IRCN.NS and Titagarh Rail Systems TITG.NS up ~43% and 25% since May

** Kotak says it's hard to reconcile valuations of railway stocks with their financials and growth prospects

** Says most railway cos' profits have either fallen or remained unchanged in 2025 from last yr, while stocks have surged

** Adds, it does not see scope for meaningful pickup in railway capex in medium term

 (Reporting by Vivek Kumar M)

 ((VivekKumar.M@thomsonreuters.com;))