Mumbai: According to a recent study by OmniScience Capital Advisors Pvt. Ltd. on the Indian railways, there is a double digital growth opportunity for Indian railway companies. Overall, in the EPC space, there are around 50 companies currently executing railway projects, and in the machinery, equipment & components space, there are nearly 30 companies with significant capabilities in the railway sector. Currently, the combined TTM (Trailing Twelve Months) revenue for these firms is around ₹2.7 lakh crores, which is a mix of railway and non-railway operations. Broadly, there is an order book potential that is 5 times the current combined turnover of these companies. This indicates a high double-digit revenue growth potential for this portfolio, making Indian Railways as a great investment opportunity for the retail investors.
Railway Growth Vector provides an opportunity to curate a portfolio from a pool of 100+ companies providing exposure to railway consulting, EPC, capital equipment, power, logistics & financing domains.
Freight revenue is the backbone of railway finances beyond the budgetary capex support and and we expect the freight revenues to strengthen as the National Rail Plan (NRP) envisages to increase railway’s share of freight traffic from the current 27-28% to 45%. PM Gati Shakti and the dedicated freight corridors will be instrumental in achieving. The initial impact shows that DFCs have slashed transit times by up to 40% and boosted efficiency by 30% for key industries. Three economic railway corridors, viz., Energy, Mineral & Cement corridor, Port Connectivity corridor and High Traffic Density corridors were other key initiatives that were announced in the budget recently.
Budgetary Capex to Unlock Rs 15-16 trillion in Opportunities for EPC, Rolling Stock & related Companies in next 5 years
The Indian Railways has set a capital expenditure of Rs 2,65,200 crore for FY26. Assuming this level of investment from Indian Railways continues to grow annually at nominal GDP growth rate of 10% over the next 5 years, OmniScience Capital cited that the cumulative potential order book for companies involved in executing these projects, such as Engineering, Procurement, and Construction (EPC) firms and wagon manufacturers, could reach an impressive Rs 16.19 lakh crore.
|
Particulars
(Rs Crore)
|
FY26
(E)
|
FY26-FY30
(E)
|
|
EPC
|
99,386
|
6,06,760
|
|
Rolling
Stock
|
58,895
|
3,59,559
|
|
Safety/Signalling/Facilities
|
22,401
|
1,36,760
|
|
Investments
|
50,349
|
3,07,386
|
|
Others
|
34,169
|
2,08,607
|
|
Total
|
2,65,200
|
16,19,073
|
This projected capex will translate into Rs 16 trillion and encompasses various sectors, including Engineering, Procurement, and Construction (EPC) with around Rs 6 trillion, Rolling Stock with Rs 3.5 trillion, Safety/Signalling/Facilities with Rs 1.4 trillion, and Investments with Rs 3 trillion.
Vikas Gupta, CEO & Chief Investment Strategist, OmniScience Capital said, “The phase 2 of Amrit Kaal schemes will focus to revolutionize and modernize the railway infrastructure. The capex budget of Railways has grown at CAGR of more than 20% over the last 14 years and in the last five years, since the announcement of National Rail Plan (NRP), 11.4 lac crore has been allocated, and our conservative estimate indicates additional 15 lac crore budgetary allocation by 2030. This augmented with capex from private sector and states take the total investment close to the initial estimate of 50 lac crore. The projected capex provides opportunity for retail investors to invest in Indian railways which will play an imperial role in advancing Indian economy.”