In the past year, railway stocks have made a remarkable comeback, generating substantial returns for investors. However, this upward momentum faced a pause in recent trading sessions. Fortunately, signs indicate that this pause is coming to an end. Today, shares of IRDA in the railway sector experienced an impressive increase of 8%, climbing by 20 points to trade at 258. Meanwhile, shares of Rail Vikas Nigam Limited (RVNL) are currently hovering around 12% below their 52-week high of ₹647, yet they have soared by 213% so far in 2024 and an astonishing 358% in just the last month. Brokerage firm StocksBox suggests that the recent correction in shares may be behind us, with a strong potential for recovery ahead.
What Do Experts Say?
According to StocksBox, RVNL shares have undergone significant growth, doubling in value since hitting a low in May 2024. Before that, a slight profit-booking phase was observed, with the decline being contained within a 20% range. The potential formation of a harmonic ABCD pattern signals a chance for short-term recovery in the stock’s price.
StocksBox further pointed out that the recent fluctuations in RVNL’s share price on August 12 have hinted at the gradual activation of previously inactive buyers, indicating a shift in strength away from sellers—a positive sign for the stock’s outlook. On Thursday, RVNL shares on the BSE rose by 1.3% to trade at ₹571.10. StocksBox advises purchasing RVNL shares with a stop-loss set at ₹538 and a target of ₹626.
Company Expansion Plans
Notably, RVNL has been actively expanding its global footprint by establishing a new subsidiary in Uzbekistan and signing a Memorandum of Understanding (MoU) with Israel. In the June quarter, RVNL founded a subsidiary named Rail Vikas Nigam LLC in Uzbekistan. Additionally, the company has partnered with United Construction Limited in Israel to collaborate on projects in various sectors including railways, MRTS, tunnels, highways, expressways, bridges, construction, airports, ports, irrigation, and power transmission and distribution.
Why Is There a Surge in This Share?
According to regulatory filings with the BSE, IRDA has announced a board meeting scheduled for August 29, 2024, as part of SEBI’s disclosure regulations. The agenda includes discussions about raising ₹4500 crores through the issuance of shares. The funds are anticipated to be collected in one or multiple phases via methods such as FPO (Follow-on Public Offer), QIP (Qualified Institutional Placement), rights issue, or preferential issuance, subject to legal and governmental approvals. Although IRDA shares have slipped approximately 23% from their record highs, brokerage firm ICICI Securities has issued a buy rating with a target price of ₹330.
