Big Capex, Bigger Order Books: What’s Next for Titagarh Rail, RVNL, and IRCON?

India’s railway sector remains a cornerstone of the government’s infrastructure-led growth strategy. With railway capital expenditure rising to ₹2.6 lakh crore in FY26, more than double the allocation in FY22, railways have clearly moved beyond being a cyclical budget theme to a sustained capex priority. This has translated into record order books for key railway-linked companies.

However, with valuations already elevated, the focus is shifting from headline capex numbers to execution, margins, and earnings delivery.

Railway Capex: From Budget Push to Structural Commitment

Railways accounted for ₹2.6 lakh crore of the total ₹11.2 lakh crore capex announced in Union Budget 2025. Over the past four years, railway capex has more than doubled, while allocations have remained consistently high, indicating a long-term policy commitment.

The expansion of the National Infrastructure Pipeline and alignment with the National Rail Plan highlight priorities such as network modernisation, electrification, capacity expansion, and freight efficiency. With Indian Railways estimated to require ₹35.3 lakh crore of investments by 2032, expectations from Budget 2026 remain constructive, with media reports pointing to a possible further increase in allocation.

Order Books Are Swelling, But Execution Is Key

Titagarh Rail Systems (TRSL)

Titagarh Rail stands out as the only Indian company manufacturing both freight wagons and passenger coaches. Its order book provides visibility up to FY31, driven by wagons, metro coaches, Vande Bharat trains, and defence manufacturing. Importantly, its growing exposure to long-term maintenance and service contracts offers annuity-style revenues and superior margin potential. However, recent supply-chain issues have weighed on near-term execution and profitability.

Rail Vikas Nigam (RVNL)

RVNL has built a massive ₹90,000+ crore order book, spanning railways, metros, roads, logistics parks, and international projects. The company is transitioning from legacy nomination-based projects to competitive bidding and manufacturing, including Vande Bharat train sets with long-term maintenance contracts. While this diversification improves revenue visibility, it has structurally lowered margins due to competitive pricing.

IRCON International

IRCON’s ₹23,865 crore order book offers steady visibility, with a dominant share from railway projects. While domestic margins are under pressure due to competition and subsidiary losses, higher-margin international contracts continue to provide earnings support. The company is also diversifying into newer segments such as Kavach and hydropower.

Margins, Not Orders, Will Drive Differentiation

As the sector matures, margin sustainability is emerging as the key differentiator. Companies with:

• long-term maintenance contracts,
• specialised manufacturing capabilities, and
• service-heavy revenue streams

are better positioned to defend profitability. In contrast, EPC-heavy players face increasing pricing pressure as competitive bidding intensifies.

Valuations Leave Little Room for Error

Railway stocks have witnessed sharp re-rating during 2023–24, pushing several names above their historical and industry valuation averages. While the long-term growth narrative remains intact, the scope for further multiple expansion appears limited. From here, earnings growth and execution quality will be the primary drivers of returns.

Read more: Indian Railways Ramps Up Battery and Green Fuel Engine Adoption.

Conclusion

The railway sector is moving from a capex-driven re-rating phase to an execution-led growth phase. Government support remains strong and order books are at record highs, but slower order awarding, margin pressure, and elevated valuations suggest that returns will now hinge on how efficiently companies convert visibility into profits.

For investors, the next leg of performance in Titagarh Rail, RVNL, and IRCON will depend less on budget headlines and more on execution discipline, margin stability, and cash flow generation.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.