Posted on March 4, 2025, by Niftynews
Shares of railway stocks surged by up to 5% on Tuesday after IRCTC (Indian Railway Catering and Tourism Corporation) and IRFC (Indian Railway Finance Corporation) were upgraded to ‘Navratna’ status. This positive news caused both IRCTC share price and IRFC share to rise sharply, sparking increased investor interest in railway stocks.
The addition of IRCTC and IRFC to the Navratna group has led to a wave of optimism among market participants, who see this as a sign of greater growth potential and financial strength for railway stocks. With all seven listed Indian Railway companies now holding Navratna status, this development is seen as a major milestone for the sector.
What Does the ‘Navratna’ Status Mean for Railway Stocks?
The ‘Navratna’ status is granted to select railway stocks and Public Sector Enterprises (PSUs) that meet strict performance criteria. To qualify, companies must demonstrate exceptional financial health, operational efficiency, and robust management. These criteria include:
- Net Profit to Net Worth Ratio
- Manpower Cost to Total Cost of Production
- Cost of Services
- PBDIT to Capital Employed Ratio
- PBIT to Turnover Ratio
- Earnings Per Share (EPS) and Inter-sectoral Performance
By achieving Navratna status, IRCTC and IRFC are expected to benefit from greater operational flexibility and access to larger funds for future expansion, which should further boost their share prices and position them as key players in the railway stocks market.
Market Reaction to the Upgrade: Focus on Railway Stocks Like IRCTC and IRFC Shares
Following the Navratna status announcement, railway stocks experienced a significant upward movement, with IRCTC share price and IRFC share seeing notable gains. For example, Rail Vikas Nigam Ltd (RVNL) saw a 4.85% rise, reaching Rs 339.25, pushing its market capitalization toward Rs 71,000 crore. Similarly, IRCON International Ltd surged by 4.09% to Rs 146.25, bringing its total market value close to Rs 14,000 crore.
Additional highlights include:
- IRFC gained 3.69%, lifting its share price to Rs 115.25 and pushing its market cap above Rs 1.5 lakh crore.
- RailTel Corporation of India Ltd advanced 3.08% to Rs 285.75.
- RITES Ltd saw a rise of 2.65%, reaching Rs 203.70.
Even IRCTC share price saw strong movement, indicating high investor confidence in railway stocks.
Expert Opinions on Railway Stocks: Should You Buy IRCTC and IRFC Shares?
With railway stocks soaring, analysts are offering their perspectives on whether to buy IRCTC shares and IRFC shares. Here’s what they are saying:
- IDBI Capital has a ‘buy’ recommendation on IRCTC, with a target price of Rs 870, highlighting the company’s strong performance and growth potential.
- Antique Stock Broking maintains a ‘hold’ rating on IRCON, with a target price of Rs 152, while giving a ‘sell’ rating for RVNL with a target of Rs 215.
- Analysts remain optimistic about IRFC shares due to the positive momentum generated by the Navratna status.
Meanwhile, Concor is viewed as a solid long-term investment, but analysts have downgraded it due to macroeconomic challenges. InCred Equities gives Concor an ‘add’ rating with a target price of Rs 1,133, while Elara Capital has reduced its target price to Rs 839, moving it to an ‘accumulate’ rating.
Conclusion: Are Railway Stocks a Strong Buy?
The recent surge in railway stocks, following the Navratna status for IRCTC and IRFC, has created a positive outlook for the sector. The enhanced autonomy and financial stability that come with Navratna status are expected to fuel further growth, making railway stocks an attractive investment opportunity.
If you’re considering adding railway stocks to your portfolio, IRCTC and IRFC offer promising prospects. However, it’s essential to stay updated on their quarterly results and consult with a financial advisor before making any decisions.
