IRCON, RVNL, Titagarh Rail Systems, Jupiter Wagons: Railway shares gain up to 15% on merger reports

Shares of companies associated with Indian Railways such as IRCON, Rail Vikas Nigam Limited (RVNL), Titagarh Rail Systems, Jupiter Wagons, RITES and Railtel Corporation surged up to 16% in an otherwise weak session on Friday, March 6. These shares came under buying interest after media reports suggested that government may consider merging two railway state-run entities IRCON and RVNL.

Ministry of Railways is considering consolidating the two rail infra companies and the proposal was mooted by Railway Board office memorandum, NDTV Profit reported. "Currently, there is a proposal for the merger of IRCON International Ltd. and Rail Vikas Nigam Ltd. (RVNL)," the memorandum stated.

IRCON reported net profit of ₹100 crore in October-March period, marking an upside of 16% from ₹86 crore in the same period last year.

Its revenue from operations, however, declined 19% to ₹2,119 crore from ₹2,613 crore.

Whereas, RVNL's revenue grew to ₹4,936 crore with a profit before tax (PBT) of ₹359 crore in third quarter of current financial year. The company’s total orderbook stands at ₹87,000 crore, with the majority of the orderbook coming from railway nomination at ₹40,000 crore.

The management guided for flat revenue growth due to a shift in the bidding process.

Following this report shares of IRCON jumped as much as 12.45% to hit an intraday high of ₹150.30 on the National Stock Exchange (NSE) and shares in RVNL advanced as much as 6.86% to hit an intraday high of ₹298.40.

The up move in these shares also had their ripple effect on other railway related companies. Shares of Jupiter Wagons advanced as much as 16% to hit an intraday high of ₹297.70. Titagarh Rail Systems shares climbed as much as 6% to hit high of ₹697, RITES gained as much as 5.22% to ₹212.40, Railtel Corporation jumped as much as 6.3% to hit a high of ₹300.