IRFC set a new 52-week high of Rs 28.70 on Thursday. (Representational)
Two railway-related stocks-- IRCON International and Indian Railway Finance Corporation -- have breached their 52-week highs in the past two days, indicating investor interest in growth opportunities in rail infrastructure.
IRCON International rose to its 52-week high of Rs 62.10 on BSE intraday on Wednesday. On the next day, another rail public sector unit (PSU) Indian Railway Finance Corporation (IRFC) set a new high of Rs 28.70.
The turnkey construction company under the Ministry of Railways had posted a net profit of Rs 178.10 for the July-September quarter on a revenue of Rs 2,117.21 crore. The profit has increased over 38 per cent from the comparable period last year. Total revenue growth was recorded at 45.69 per cent at Rs 2,305.87 crore.
Analysts said the company's order book looks healthy. As of September 30, the total order book stands at Rs 40,020 crore. Railways account for a large chunk of order book at Rs.30,712 crore.
Though the stock has retreated from the high level, it has been mostly a steady rise the one month since October 18 when the stock was trading at 42 levels. The stock is trading at Rs 56.45 on Friday.
According to analysts, the government's focus on infrastructure development and increased spending have boosted infra stocks. Investors are buoyed as they expect significant growth in infrastructure.
"Headwinds arising out of rising cost pressure and inflationary impacts could have some volatility," Ircon International has said.
Indian Railway Finance Corporation (IRFC), the infrastructure finance company, under the Ministry of Railways, set a new 52-week high of Rs 28.70 on Thursday.
The company has reported a net profit of Rs 1,714.28 for the July-September period as against Rs 1,661.58 in the previous three-month period. Revenues grew from Rs 5,627.44 as of June-end to Rs 5,809.80 as of September-end.
The cumulative funding by IRFC to the rail sector crossed Rs 5.04 lakh crore at the end last financial year. Importantly it has no bad loans on its books, which has bolstered investor sentiment.
Assets under the management of IRFC, the funding arm of Indian Railways, stood at Rs 4,29,851 crore at the end of 2021-22.
"In the current market, we have seen that lots of stocks that are trading with cheaper/low valuations are outperforming others. Similarly, lots of PSU stocks fall into this low valuation category hence the trend is seen," said Narendra Solanki, Head- Equity Research, Anand Rathi Shares & Stock Brokers.
