Ircon vs RVNL: A contrasting tale of two railway stocks

Every year, ahead of the budget, investors get excited about the prospects of incremental spending by the railways that would translate into order inflows for railway infrastructure companies. Perhaps this expectation drove shares of Indian Railway Construction International Ltd (Ircon) and Rail Vikas Nigam Ltd (RVNL) up by 5.6% and 3.4%, respectively, on Wednesday.

- Manish Joshi

Ircon and RVNL shares hit their respective all-time intraday highs of ₹351 and ₹647 on the same day—15 July—and have since fallen substantially. Based on IDBI Capital's estimates, Ircon's valuation appears reasonable, at a price-to-earnings (P/E) multiple of 23x for FY25. But its order book is just enough to cover two years of FY24 revenue and, more importantly, the order inflow is not picking up.