- Railway stocks remain in focus ahead of Union Budget 2026 amid expected govt infrastructure spend
- Railway capital expenditure in FY26 projected to rise by around 15%, supporting capacity and modernisation
- Budget impact on railway stocks likely, favoring firms with strong order books and execution
Railway-linked stocks are expected to remain in focus around the Union Budget 2026, amid expectations of continued government spending on infrastructure and policy continuity in the railways sector. While markets are not anticipating major surprises on the allocation front, analysts believe sustained capital expenditure will continue to support select railway stocks, particularly those aligned with execution, safety upgrades and capacity expansion.
Positive sentiment around railway equities is underpinned by the broader infrastructure thrust outlined in the Economic Survey, which points to record capital outlays, rapid network expansion and near-universal electrification. Railway capital expenditure is projected to rise by around 15% in FY26, reinforcing the government's corridor-led approach to capacity creation, asset modernisation and multimodal connectivity.
Market participants note that the Budget's impact on railway stocks is likely to be stock-specific rather than sector-wide. Companies with robust order books, strong execution capabilities and visibility on future projects are expected to outperform, while a broad-based re-rating across the sector appears unlikely as much of the optimism is already reflected in current valuations.
Among public sector undertakings, RITES is seen as a preferred pick due to its consultancy-led business model and close alignment with government-driven railway and infrastructure projects. In the non-PSU segment, Titagarh Rail Systems is drawing attention as a key beneficiary of rolling stock demand, supported by ongoing capacity expansion and export opportunities.
Railway-linked ancillary stocks, particularly those exposed to signalling, safety systems and train protection technologies, are also expected to attract investor interest. Companies such as CG Power, HBL Power and Kernex Microsystems could benefit from higher allocations towards advanced signalling, electronic interlocking and the accelerated rollout of the Kavach automatic train protection system.
Brokerage firms, including Axis Securities, have highlighted that station redevelopment and safety upgrades are likely to remain key budget priorities. Faster implementation of economic railway corridors under PM GatiShakti, along with wider adoption of Kavach 4.0 and advanced signalling systems, is expected to shape execution strategies in the coming years.
Overall, analysts say the Union Budget 2026 will be closely watched for cues on policy stability and the government's long-term commitment to railway modernisation.
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