Budget 2026: Railway stocks Kernex, Titagarh, BEML, HBL may benefit from capex push

Railways sector is expected to attract enhanced budgetary allocation in Budget 2026 after three years of relatively muted growth, with the mix shifting towards capacity augmentation, rolling stock induction and safety-related work, analysts tracking the sector said.

Investors are expecting gross budgetary support for railways to remain range-bound around FY26 levels of Rs 2.52–2.65 lakh crore so far, but with a re-weighting towards safety (Kavach), decongestion (track doubling and DFC), station redevelopment and NHSRCL (bullet train).

But Kamal Poddar, MD at Choice International said railways sector is likely to remain the single largest beneficiary, with allocations approaching Rs 2.8 lakh crore acting as a strong signal of infrastructure commitment. Poddar in a BTMarkets survey said overall capex for FY27 could be pegged at Rs 12-12.3 lakh crore, up 10-12 per cent over Budget FY26. 

Nuvama Institutional Equities believes the broader policy objective remains lowering logistics costs and improving competitiveness, as despite India's improved logistics costs, they are still above the 6–7 per cent typical of advanced economies. This brokerage believes higher allocation to railways, if materialised, would be positive for players across the spectrum ranging from consultancies to project players and to equipment suppliers.

Any increase in safety measures in railways would be positive for Kavach system providers. HBL Engineering (erstwhile HBL Power Systems Ltd), Kernex Microsystems (India) Ltd, Siemens Ltd and CG Power & Industrial Solutions Ltd (GG Tronics) are expected to be key beneficiaries of it. The railways ministry is already working on a massive 18,000-km tender for Kavach 4.0, which will require significant investment, Emkay Global noted.  

"With railways electrification nearing completion, capital deployment is likely to be redirected toward easing congestion through new lines, gauge conversion, track doubling, and the expansion of Dedicated Freight Corridors and economic corridors linked to ports and mineral clusters," it said.

Any push for modernisation of trains will be seen positive for the coach developer such as BEML Ltd, BHEL, Siemens Ltd and Titagarh Rail Systems Ltd.  

Axis Securities said railways should witness a 15 per cent growth in budgetary allocation in 2026-27. MOFSL expects a rise in the capex for railways, which could go up by 8-10 per cent YoY.