On Friday, shares of railway-related companies, including IRFC, IRCTC, RVNL, and RailTel Corporation, experienced gains of up to 2% due to a surge in buying activity. Although these multibagger railway stocks have shown a modest recovery from their recent lows, it is worth noting that they still remain significantly below their respective 52-week highs.
RVNL Performance Overview
Rail Vikas Nigam Ltd (RVNL) has seen an extraordinary rise year-to-date (YTD), surging by an impressive 161% and yielding a staggering return of 1,466% over the last three years. Despite this significant performance, RVNL shares are currently trading over 35% lower than their 52-week high of ₹618, which was reached on July 12, 2024.
IRFC Returns and Trends
In a similar vein, the Indian Railway Finance Corporation (IRFC) has delivered multibagger returns exceeding 101% over the past year. Nevertheless, the stock has experienced a decline of more than 34% from its 52-week peak of ₹229.05, which occurred on July 15.
Current Stock Movement
IRCTC shares have fallen by over 23% from their highest values, while IRCON International has seen a nearly 38% decline. RailTel shares, too, have dropped more than 35% from their respective highs, indicating a sector-wide trend of decreasing valuations.
Reasons Behind Railway Stocks’ Decline
The railway stocks initially rallied after significant allocations were made in the 2023-24 budget, which fueled optimism and investment. As expectations for higher funding persisted, many investors were left disappointed by the actual allocations, which fell short of predictions. This disappointment led to a sharp correction in railway stocks from their peak values, underscoring the volatility in this sector.
Outlook for Railway Stocks
Currently, prominent railway stocks such as IRFC, IRCTC, RVNL, RITES, and IRCON International are considered to be trading in an oversold zone. Analysts suggest that these stocks are technically poised for an upside breakout. As per Ganesh Dongre, Senior Manager — Technical Research at Anand Rathi, traders should adopt a ‘buy on dips’ strategy for these railway stocks, indicating a potential rebound.
IRCTC: Buy Recommendation
For IRCTC, the current stock movement displays signs of exhaustion but has a strong support level at ₹800. Investors are encouraged to buy IRCTC shares on dips, with a stop-loss set at ₹800 and a target range of ₹960 to ₹990.
IRFC: Buy Signal
IRFC shares appear ready for a bounce back, offering a promising investment opportunity. Investors are advised to accumulate IRFC shares, targeting prices between ₹200 and ₹210, while maintaining a stop-loss in the range of ₹130 – ₹135.
RVNL: Attractive Entry Point
RVNL shares have exhibited a favorable breakout, and a buy-on-dips strategy is recommended. Investors should set a stop-loss at ₹420, aiming for a target price of ₹530 to ₹550.
RITES: Investment Potential
RITES stock has established a bullish reversal pattern, suggesting strong future performance. Investors are encouraged to buy RITES shares at the current market price and consider adding on dips, targeting ₹350 to ₹360 with a stop-loss at ₹270 to ₹280.
IRCON: Strategic Buy
IRCON International shares have shown signs of bottoming out within the ₹200 to ₹215 range and are indicating a reversal pattern. A recommendation is made to buy IRCON shares at the current market price, targeting ₹260 to ₹270, with a stop-loss set at ₹205.
Disclaimer: The insights and recommendations presented are those of individual analysts or brokerage firms and do not represent the views of the source. Investors are advised to consult certified professionals before making any investment decisions.
