Stock Market: Bulls board companies with once in decades expansion theme

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By S Jha

New Delhi, April 9: Market veterans have said on several occasions that they spend time to pick sectors which breakout from decades of status quo for major expansion to make the most of the gains in the equity markets.

Such focus brought great gains for the market participants when they rode the IT sector in early 2000s. They again made the killings when China cracked down against the polluting industries to hosting the Olympics, with gains coming in the space of tyre and chemical industries.

With annual budgetary allocation stepped up 10 times, the Railways is being seen as an area ripe for a major turnaround. The market participants believe that the focus of the Narendra Modi government seen in intense scale in the road sector may be seen in the railways.

From Rs 25,000 crore annual budgetary support, the Ministry of Railways has now the deep pocket of Rs 2.50 lakh crore to attempt to break free from status quo of decades. The focus is clearly on the capacity augmentation by adding rail lines, station redevelopment, speeding up freight speed, monetization of assets, etc.

The theme appears to be already playing out. Rail Vikas Nigam Limited, which had been one of the most laggard scrips on the bourses, is seen spurting with quick gains. In the last five days, the scrip has close to 11 per cent. In six months, it has risen by over 90 per cent.

On October 2022, Rail Vikas Nigam was trading at Rs 35, and from this level the scrip broke out to ascend like a straight line upwards. It hit the peak of Rs 80 almost in a month on November 28, 2022. For the next six months, it went into consolidation, with retracement dragging the scrip downwards. On March 1, 2023, Rail Vikas Nigam hit the low of the retracement at Rs 58, and from there it resumed the upward journey, reaching Rs 75 and staring at an all-time peak for a possible breakout.

Titagarh Wagon, a private player in the Railways space, was trading at Rs 25 a share on March 25, 2020, and since then it as only been an upward journey, backed by improvement in the financials and rerating by the market participants. The scrip has multiplied almost by 12 times to trade now at Rs 291, having broken out of the last peak of Rs 180 seen in 2018 on January 20, 2023.

IRCON is also showing a positive journey, but at a low scale. IRCTC, in contrast, has been a laggard, losing out on valuation, as it trades now near its IPO price.