Rail stocks surge upto 20% on FDI hopes; Texmaco looks best among the lot

NEW DELHI: Wagon and railroad infrastructure builders rallied as much as 20 per cent in trade on Monday after a media report suggested that the government could allow foreign direct investment in the railway sector, citing an unnamed senior government official.

Kalindee Rail Nirman Engineers is up 20 per cent, Titagarh Wagons surged 10 per cent, Texmaco Rail & Engineering rallied 15.4 per cent and Hind Rectifiers zoomed nearly 16 percent in intraday trade.

It is once in a year that you see these stocks come into play; and this time around it is not because of the railway budget, it is more because of the policy changes that the government has put in place, say analysts.

The report says the foreign direct investment limit could vary by specific area, adding that the proposal has been prepared by the commerce ministry and sent for approval to the Cabinet, which could consider it either on January 2 or January 9, Reuters reported.

India has been contemplating opening up investments in railway infrastructure to foreign players in a bid to attract foreign funds to finance its ailing infrastructure.

“Among the entire pack, Texmaco Rail & Engineering is something that we will be positive on; but given the kind of uptick that we have seen, we would again recommend a strategy to buy on dips over there,” said Gaurang Shah, VP, Geojit BNP Paribas Financial Services.

“If there is some change in policy emerging, it could throw in a lot of triggers for this sector. As of now, TEXRAIL is the only one that we would possibly recommend on dips,” he added.

Kalindee Rail Nirman Engineers ended the day 20 per cent higher at Rs 79.20, followed by Hind Rectifier, which closed 12.6 per cent higher at Rs 44.15.

Titagarh Wagons closed 10 per cent higher at Rs 114.55 and Texmaco Rail & Engineering ended 11.6 per cent higher at Rs 45.10.