5 Stocks With the Highest Railway Kavach Order Books

The Indian Railways' modernisation drive is throwing up a set of big winners in the stock market.

One theme riding this wave is the government's ambitious 'Kavach' safety system-a cutting-edge, indigenous technology designed to prevent train collisions.

As Kavach tenders pick up pace, companies with strong execution capabilities and product alignment are looking attractive in the market.

Many stocks have already rallied in anticipation, but the real story may still be unfolding in the order books.

In this editorial, we look at five stocks sitting on the largest Railway Kavach-linked order books.

Let's take a look...

#1 HBL Engineering

First on the list is HBL Engineering.

HBL Engineering is engaged in the manufacturing of industrial batteries, electronics, and engineered products. It also provides charging infrastructure for electric vehicles through its subsidiary.

It caters to sectors, including telecom, UPS, defence, and railways in India.

HBL's order book stands at Rs 40 billion (bn). This includes a Rs 15 bn order from Chittaranjan Locomotive Works (CLW) for the installation of Kavach in 2,200 locomotives. This order is expected to be completed in FY26, with revenue expected to be 30% higher than FY25.

Additionally, it secured an order worth Rs 1.6 bn for Kavach from South Central Railway. The current book offers revenue visibility of about 2 years, based on FY25 revenue of Rs 19.7 bn.

That said, the company posted dismal numbers in FY25. Revenue declined 12% year-on-year (YoY), while net profit remained flat at Rs 2.8 bn, down 1.4% from YoY.

Looking ahead, the battery vertical will be a core revenue driver, followed by electronics.

To reduce this revenue concentration, it is diversifying into the railway segment, as it expects more orders for Kavach.

After FY26, the company expects its revenue to grow at a rate of 20% annually.

Check out HBL Engineering's financial factsheet and quarterly snapshot to know more.

#2 RailTel Corporation

Second on the list is RailTel Corporation.

RailTel is a Navaratna Public Sector Undertaking (PSU). It owns a pan-India optical fiber network, providing broadband and multimedia services. It also modernises and maintains the communication network of the Indian Railways.

It has two core businesses. The telecom segment provides leased lines and internet services. The project segment lays down and maintains optical fiber cable networks for other entities.

The telecom segment contributes 23% to revenue, while the rest comes from the project segment.

The company's order book stands at Rs 66 bn. This includes a Rs 2.9 bn Kavach order, which will be installed at 71 stations across the 502-km-long rail track.

Additionally, it secured a Kavach order worth Rs 1.6 bn in May.

RailTel's revenue increased 35% YoY to Rs 35 bn in FY25, while net profit rose 22% YoY to Rs 3 bn. Based on FY25 revenue, the order book offer revenue visibility of about 2 years.

Looking ahead, the company is looking to secure orders worth Rs 40 bn in FY26. It also aims to maintain the current growth momentum, growing 25-30% annually.

RailTel also expects continued growth, especially in its data center business.

Check out RailTel's financial factsheet and quarterly snapshot to know more.

#3 Kernex Microsystem

Third on the list is Kernex Microsystem.

Kernex Microsystem manufactures, installs, and maintains anti-collision devices, and conceptualises, designs, and develops railway safety and signaling systems.

The company also manufactures train collision avoidance systems and automatic level crossing gates.

The company is a major beneficiary of Kavach projects. It's order book stood at Rs 21 bn, of which about Rs 16.8 bn is from the Kavach system.

This order book comprises a Kavach order worth Rs 17 bn from Chittaranjan Locomotive Works and Rs 1.79 bn from Southeastern Railway.

The order book provides strong revenue visibility for the long term.

On the financial front, revenue increased 9.5 times to Rs 1.9 bn in FY25. It also became profitable, with Rs 0.5 bn of profit, from a loss of Rs 0.3 bn in FY24.

Looking ahead, Kernex is relying on a strong bid pipeline. It has submitted bids worth Rs 30 bn, and also expects future bid potential of Rs 8.9 bn.

Check out Kernex's financial factsheet and quarterly snapshot to know more.

#4 Quadrant Future Tek

Fourth on the list is Quadrant Future Tek.

Quadrant Future Tek is a research-oriented company, engaged in developing next-generation train control and signaling systems.

It also produces cables for railway rolling stock, naval defence sector, and solar and EV applications.

Quadrant is a major beneficiary of Kavach projects of the Indian Railways. It has signed a memorandum of understanding with RailTel to collaborate on tenders for Kavach projects.

The company's Kavach's order book as of January 2025 was Rs 9.8 bn. In addition, it has also secured a Kavach order worth Rs 1.6 bn from RailTel in March.

On the financial front, the company's revenue has been flat at around Rs 1.5 bn since FY23.

Revenue remained flat at Rs 1.5 bn in FY25. The company reported a loss of Rs 0.2 bn, a sharp reversal from a profit of Rs 0.15 bn.

Looking ahead, Quadrant expects the growth from Kavach projects to be strong.

Check out Quadrant's financial factsheet and quarterly snapshot to know more.

#5 CG Power

Last on the list is CG Power.

CG Power, part of the Murugappa Group, is an Indian engineering company, which manufactures electrical products including transformers, switchgears, and circuit breakers.

The company also produces railway transportation and signaling products.

It operates in two segments: Industrial and Power. 58% of its revenue comes from the industrial sector, while the remaining comes from the power sector.

CG Power unexecuted order book stood at Rs 106 bn. The order book includes an order worth Rs 5-6 bn for Kavach installation, which also includes annual maintenance for 11 years.

Revenue rose 23% to Rs 99 bn. This growth was led by a 35%, and 16% revenue growth in the power and industrial systems segments.

The company's net profit grew about 12% YoY to Rs 9.7 bn in FY25. The profit growth was led by a 61% YoY rise in the power systems segment's profit before interest and tax (PBIT). The industrial segment's PBIT declined 5% YoY.

Looking ahead, the company is expanding the capacity of power transformers in response to the strong demand for transformers in the domestic as well as export markets.

CG Power is also setting up an outsourced semiconductor assembly and test facility, which is expected to start production by FY27.

Check out CG Power's financial factsheet and quarterly snapshot to know more.

Conclusion

The Kavach system is a landmark step in railway safety and modernisation.

As of October 2024, the Kavach project has made considerable progress, with 1,948 route kilometers (Rkm) of track-side equipment already deployed.

In addition, the Indian Railways has invited bids for additional track side works covering 15,000 Rkm, with another 9,000 Rkm currently under bidding.

This offers companies the potential for a strong order intake and steady revenue over the coming years. But risks remains in companies like Quadrant and Kernex which rely completely on the Kavach projects.

That's why, instead of relying only on hype, it is necessary to carefully analyse the company's fundamentals, including financial performance, corporate governance practices, and growth practices.

Happy Investing.

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