Railway-linked stocks are expected to remain in focus around Union Budget 2026, amid expectations of continued government spending on infrastructure and policy continuity in the railways sector. According to NDTV Profit while markets are not anticipating major surprises on allocation front, analysts believe sustained capital expenditure will continue to support select railway stocks.
Projected Capital Expenditure Growth
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. The 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.
| Key Focus Areas: |
Details |
| Capex Growth: |
15% rise projected in FY26 |
| Priority Areas: |
Execution, safety upgrades, capacity expansion |
| Approach: |
Corridor-led capacity creation |
| Infrastructure Focus: |
Asset modernisation, multimodal connectivity |
Stock-Specific Investment Opportunities
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.
Public Sector Undertakings
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.
Non-PSU Segment
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.
Ancillary Stocks and Technology Focus
Railway-linked ancillary stocks, particularly those exposed to signalling, safety systems and train protection technologies, are expected to attract investor interest. The following companies could benefit from higher allocations:
| Company: |
Focus Area |
| CG Power: |
Advanced signalling systems |
| HBL Power: |
Electronic interlocking |
| Kernex Microsystems: |
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.
Market Outlook
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. The sustained focus on infrastructure development and technological upgrades positions select railway stocks as potential beneficiaries of continued government spending in the sector.
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