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Railway Stocks Surge as Passenger Fare Hike Takes Effect

Mumbai, India – Shares of railway-related companies experienced a significant rally on Friday, driven by the implementation of revised passenger train fares and anticipation of increased budgetary allocations for the sector. Rail Vikas Nigam Ltd (RVNL), Indian Railway Finance Corporation (IRFC), Indian Railway Catering and Tourism Corporation (IRCTC), and RailTel all saw substantial gains, with RVNL leading the charge, climbing over 12% during the trading day.

The revised fare structure, effective today, marks the second fare increase this year and is projected to generate an additional ₹600 crore in revenue for the Indian Railways in fiscal year 2025-26. The fare hike is seen by market participants as a positive development, bolstering the financial health of the Railways and potentially leading to increased spending on infrastructure, wagons, and related services.

Shravan Shetty, Managing Director of Primus Partners, commented that the gains are “linked to the fare hike announcement and its potential impact on railway finances.” He further noted that while railway stocks aren’t directly impacted by fare revisions, improvement in financial health of Indian Railways could accelerate capital expenditure and support revenue growth for wagon and infrastructure players.

Adding to the optimism is the anticipation surrounding the upcoming Union Budget 2026-27, with investors positioning themselves in expectation of favorable allocations for the railway sector.

However, analysts caution against excessive exuberance. Sunny Agrawal, Head of Fundamental Research at SBI Securities, suggested that the rally has been largely driven by Budget-related expectations. Agrawal also pointed out that conversion of preferential issue by the promoter of Jupiter Wagons led to a sharp rise in the stock and spilled over to other railway engineering, procurement and construction (EPC) companies.

SBI Securities recommends booking profits in railway EPC stocks like IRCON, RITES and RVNL, and prefers wagon-related businesses and sees the current rally as an opportunity to book profits in railway EPC stocks

The fare increase amounts to up to 2 paise per kilometer for various classes of travel. Sleeper, AC, and non-AC classes will see a 1 paise per km increase for non-mail or non-express trains, while Mail or Express fares will increase by 2 paise per km.

Investors are advised to consult with certified financial experts before making any investment decisions.

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