Credit rating agency ICRA in its latest report has said that the Indian railway sector is expected to see a moderate revenue growth of 5 per cent in FY26, driven primarily by strong performance from wagon manufacturers, while construction entities in the sector may witness slower growth. The report highlighted that the weighted average operating margins for the sector will remain healthy at around 12 per cent in FY26, supported by operating leverage benefits and stable input prices.
This comes amid sustained government investments in railway infrastructure, with the capital outlay increasing by 130 per cent over the past five years to Rs 2.52 lakh crore in 2025-26 (Budget Estimates). However, it stated budgetary support has grown only modestly by 2 per cent between FY24 and FY26, indicating a potential slowdown in funding momentum.
Suprio Banerjee, Vice President and Co-Group Head, Corporate Ratings, at ICRA, noted that railway sector entities have been key beneficiaries of the government’s push to improve connectivity and reduce logistics costs. Over the last three years, companies involved in rolling stock, wagon manufacturing, track infrastructure, and electrification have seen a robust 24 per cent compounded annual growth rate (CAGR).
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