Stocks to buy: Ircon, RITES, Titagarh Rail - three railway stocks with up to 30% upside

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Also Read: Stocks to buy: HAL, Bharat Electronics, Mazagon Dock among top defence stock picks by Antique Broking Here are top railway stocks to have in your portfolio: IRCON International (IRCON) is engaged in railway EPC works and the railways garner the lion’s share of around 73% of its order book. The company’s order book stands at ₹324 billion as on June 30, 2023. It wishes to foray aggressively in high speed rail, semi high speed, solar and road projects.

Antique Stock Broking foresees a 10% CAGR in revenue and net profit over the next three years for the company. However, competitive intensity and linear infrastructure delays can cap the growth limit. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) The brokerage has a ‘Buy’ rating on the stock and a target price of ₹176 per share, implying an upside of over 23% from Wednesday’s closing price.

Big ticket projects with competitive margins and poor capital allocation can act as risks. RITES will add ₹8.5 billion from Zimbabwe and ₹5 billion from Mozambique to its near-zero export backlog, which should assure stability by FY26E. The company is scouting for further export orders, each with a minimum ticket size of ₹5 billion.

Moreover, consultancy contributes ₹27 billion out of ₹57 billion backlog, which will be a steady growing annuity. All these factors will work in the company’s favor, as per the brokerage report. “Even in a bear case, that is, if exports are won at low margins, we see a 5% net profit CAGR at the least.