Rail Stocks Dip After Budget, Despite Infrastructure Plans

New Delhi, Feb 1 (PTI) Stocks of companies related to railways gave up initial gains and ended lower on Thursday after the presentation of the interim Budget.

Shares of IRCON International declined 3.69 per cent, Rail Vikas Nigam went lower by 3.49 per cent, Indian Railway Finance Corporation fell by 2.85 per cent and Jupiter Wagons skidded 1.93 per cent on the BSE.

The stock of Indian Railway Catering and Tourism Corporation (IRCTC) fell by 1.57 per cent, Texmaco Rail & Engineering dipped 0.82 per cent and Titagarh Rail Systems (0.55 per cent).

Rail stocks were trading in positive territory in the morning trade.

The 30-share BSE Sensex declined 106.81 points or 0.15 per cent to settle at 71,645.30 in a volatile trade on Thursday.

Subahoo Chordia, President & Head - Real Assets at Edelweiss Alternatives, said the improvement of railway infrastructure is poised to fuel economic growth.

The government will implement three major economic railway corridor programmes and convert 40,000 normal railway bogies to Vande Bharat standards, Finance Minister Nirmala Sitharaman said on Thursday.

Presenting the interim Budget for 2024-25, she said that creating the corridors will decongest high-traffic corridors and also improve passenger train operations.

While railway corridors will improve the efficiency of logistic services and reduce cost, conversion of coaches will increase the safety, convenience and comfort of passengers, she said.

"Three major economic railway corridor programmes will be implemented. These are energy, mineral and cement corridors, port connectivity corridors, and high-traffic density corridors," Sitharaman said.

"The projects have been identified under PM Gati Shakti for enabling multi-modal connectivity. They will improve logistics efficiency and reduce cost," she said.

"The announcement towards developing three major railway corridors centred around industrial themes (energy, mineral and cement), port connectivity and high-density traffic corridor is a key step towards improving the railways connectivity aiming at significantly reducing the high logistics costs in comparison to global benchmarks," said Sandeep Upadhyay, Managing Director – Infrastructure Advisory at Centrum Capital.

These capital-intensive railway connectivity projects have been identified under the PM Gati Shakti initiative for improving multi-modal connectivity to further complement the development of dedicated freight corridors, enabling faster economic development as well as generating significant employment opportunities, he said.

"This is a major positive for stakeholders catering to railway, logistics and urban mobility space. Announcements pertaining to upgrading railway infrastructure with emphasis on improving safety, convenience and comfort of passengers is a key takeaway from the FM's speech," Upadhyay added.

The creation of new railway corridors will result in decongestion of high-traffic corridors and "will also help in improving operations of passenger trains, resulting in safety and higher travel speed for passengers", Sitharaman said.

She said that "40,000 normal rail bogies will be converted to Vande Bharat standards to enhance safety, convenience and comfort of passengers".