Railway stocks continue to rise for the fifth straight session on Friday, December 26. Today’s rally is being driven by a mix of pre-Budget positioning, optimism around policy measures, and fresh sector rotation.
RVNL stood among the biggest gainers as the railway stock rallied 12.30% to 388.20 on Friday. Meanwhile, RailTel and IRFC shares surged up to 9% in Friday’s trading session. On the other hand, IRCTC share price also rose nearly 5% to 704 apiece.
What’s behind the rally?
A major catalyst for today’s movement is growing optimism ahead of the Union Budget 2026. Railway stocks typically attract buying interest in the run-up to the Budget, as investors factor in the likelihood of increased capital spending on infrastructure, rolling stock, and network upgrades.
Following a subdued performance in 2025, investors seem to be re-entering railway stocks, wagering that the government will maintain railways as a key focus of its broader infrastructure development agenda.
The recent rationalization in railway passenger fares has further buoyed sentiment, with even marginal increases being welcomed by markets as they point to better revenue visibility across the railways ecosystem.
Companies like IRCTC, which earn from ticketing volumes, catering, and ancillary services, are viewed as indirect beneficiaries of improved passenger economics—helping in the stock’s movement despite its otherwise defensive business profile.
“Indian railway stocks are rising as investors are factoring higher record budgetary allocations to Railways, and faster execution of projects like station redevelopment, electrification, Vande Bharat trains and dedicated freight corridors in coming few quarters,” said Prashanth Tapse, Sr. VP Research analyst at Mehta Equities.
Tapse explained that strong improvement order inflows, increasing revenue visibility, improved delivery and execution, operating leverage, and balance-sheet strength of key railway PSUs are supporting earnings upgrades, while structural policy continuity to push and improve long-term return expectations, can lead to long term re-rating for the sector.
Which railway stock to buy amid ongoing rally?
Amid ongoing rally in the railway stocks, Prashanth Tapse of Mehta Equities recommend investors to buy IRFC stock with a target price of 145/ 158, saying that the PSU company presents a compelling infrastructure-finance proxy for investors looking to participate in India’s multi-year railway expansion and modernization cycle.
“As the dedicated financing arm of Indian Railways one of the world’s largest rail networks IRFC is a direct beneficiary of sustained government capex on rolling stock, electrification, freight corridors, and capacity augmentation. The company’s AAA credit ratings and sovereign-linked borrower profile translate into near-zero credit risk, highly predictable cash flows, and strong asset quality, making its business model structurally stable across market cycles. This unique positioning offers investors low-risk exposure. to the railways theme, supported by steady annuity-like earnings and potential valuation re-rating as financing volumes and execution momentum improve,” Tapse added.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
