Investors are showing a newfound interest in railway infrastructure companies as the Union Budget 2024 draws near. Among these, the Indian government-owned telecom service Railtel stands head and shoulders above the competition.
Following wednesday announcement that it had secured an order for Rs 82.41 crore from South Central Railways, its stock price rose 1% to Rs 363.
This brings Railtel’s entire order book for January 2024 to over Rs 150 crore, making it the third large contract given to the company this month.
With the announcement of its Q3 FY2024 results scheduled for January 24th, the timing of the influx of new projects couldn’t be better for the company.
In 2000, the Indian Railways commissioned Railtel to build a nationwide broadband, telecom, and multimedia network. With more than 60,000 RKM of optic fiber cable, it has grown into the biggest neutral telecom infrastructure provider in the nation.
With the Indian Railways network undergoing fast digitalization and infrastructural enhancements, the company is in a prime position to take advantage of these developments. Critical communication infrastructure is already provided, allowing train control operations and safety systems to run smoothly.
Since the government is planning to upgrade trains as part of its infrastructure drive, Railtel stands to benefit greatly from its niche expertise. Given the stock’s promising future, it’s no surprise that investors are piling in.
The Centre for Development of Telematics (C-DoT) placed an order with Railtel on January 10, 2024, for Rs 29.54 crore. The purpose of this is to improve the country’s railway system’s MPLS network links.
It had previously won a contract for Rs 39.88 crore from the Bihar Education Project Council on January 9. The recently announced National Education Policy is being supported by this project, which entails setting up one thousand MPLS-VPN locations.
Implementing IP-MPLS-VPN services was the most recent order from South Central Railway, valued at Rs 82.41 crore. The deadline for this task is September 8, 2025.
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The optical fiber network of Railtel will receive an additional boost from the influx of new projects in outlying rural areas and smaller towns. Its prospects for future revenue development are bright because of this.
Over the past year, the stock has provided investors with excellent gains. Shares of Railtel have soared 18% in the past 12 months, outperforming the benchmark indexes Sensex and Nifty.
The stock has soared 22% in just one month of 2024. Investors are rushing to hop on the Railtel bandwagon in anticipation of Finance Minister Nirmala Sitharaman’s presentation of the Union Budget 2024 on February 1.
Soon, on January 24, all eyes will be on Railtel’s third quarter results. Profitability could grow, according to analysts, as demand for the company’s telecom infrastructure goods and services continues to rise.
It may be a good moment for investors to cash in on India’s booming railway infrastructure.