Shares of IRCON and Rail Vikas Nigam Limited (RVNL) rallied sharply on Friday after reports indicated that the Ministry of Railways has moved a formal proposal to merge the two PSU companies. According to reports from ET Now, IRCON shares surged 12.7% to trade at ₹150 apiece, while RVNL stock price gained 6.8% to hit an intraday high of ₹298. The proposed merger aims to create a unified entity with combined specialised expertise, enhance execution capacity by leveraging RVNL's project management strengths and IRCON's expertise in turnkey projects and railway construction, as well as increase international presence and operational efficiency.
As reported by ET Now, the exchanges have sought a response from both the Navratna Public Sector Undertakings on the media reports regarding the proposed merger. Since both IRCON and RVNL are publicly listed on the BSE and NSE, any proposed merger between the two PSUs would likely be executed through a share-swap arrangement for their shareholders. The proposed merger will now have to undergo a standard review process including approvals from the Ministry of Finance, the Department of Public Enterprises and the Cabinet Committee on Economic Affairs (CCEA).
According to ET Now, IRCON shares have fallen 3% in one month and dropped 18.01% year-to-date, with the company having a market capitalisation of ₹13,924 crore. As of December 31, the central government owned a 65% stake in the company, while the remaining 35% was held by the public. RVNL shares, meanwhile, have declined 8.55% in one week and are down 19.97% year-to-date, with the company currently having a market capitalisation of ₹61,185 crore. As of December 31, the central government owned a 73% stake in the company, while the remaining 27% was held by the public.
As reported by Upstox, other railway stocks also recorded sharp gains with Jupiter Wagons shares advancing as much as 16% to hit an intraday high of ₹297.70, indicating positive sentiment across the railway sector. Titagarh Rail Systems shares climbed as much as 6% to ₹697, while RITES gained as much as 5.22% to ₹212.40 and Railtel Corporation jumped as much as 6.3% to hit a high of ₹300. The stocks recently declined sharply as rising geopolitical tensions between Iran and Israel and the United States dampened sentiment for railway stocks. RITES shares climbed 3.5%, while Texmaco Rail & Engineering shares climbed nearly 6%, and Titagarh Rail Systems shares were up 5% at ₹690.80 per share on the NSE.
According to Upstox, IRCON reported net profit of ₹100 crore in the October-March period, marking an upside of 16% from ₹86 crore in the same period last year, though revenue from operations declined 19% to ₹2,119 crore from ₹2,613 crore. RVNL demonstrated strong performance with revenue growing to ₹4,936 crore with profit before tax (PBT) of ₹359 crore in the third quarter of the 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, though management guided for flat revenue growth due to a shift in the bidding process.
