Budget 2025: Can KAVACH Be a Game-Changer for Siemens, Quadrant Future, and More Stocks?

Railway sector would soon be in focus in the upcoming Budget 2025 especially when implementing the contemporary safety system, KAVACH. Originally developed as the Train Collision Avoidance System (TCAS), KAVACH is primarily designed to reduce the risk of collision between trains in order to further protect the passengers onboard. This latest government programme is expected to unlock new growth opportunities for over five and a half dozen firms such as Siemens, Quadrant Future Tek, and Kernex Microsystems.
Substantial hurd up for Railways
With regards to signaling and telecom only, the FY25 budget saw an increase by 30 percent which is a clear signal of the government’s push towards safety. For railway, Finance Minister Nirmala Sitharaman allocated ₹2.16 lakh crore for FY24 and expected ₹2.33 lakh crore in FY26 and ₹2.51 in FY27. Jefferies estimates it means capital spending CAGR of 13% to FY24-FY27.
According to the railway budget announcement for FY21 and the expectation of Head of Research at StoxBox, Manish Chowdhury, there would be more than 18% increase in railway sector allocation for FY25. He also reveals that 10000 train engines will be fitted with KAVACH and around 5500- 5000 track KMs will be targeted for coverage in the next couple of years by the Ministry of Railways.
Stocks Benefiting from KAVACH Implementation
- HBL Engineering
Formerly known as HBL Power Systems, HBL Engineering has experienced a 5% rally in recent trading sessions. The company secured a significant ₹1,522 crore KAVACH order in December, underlining its potential to benefit from the government’s focus on safety systems. - Kernex Microsystems
Kernex Microsystems, a provider of the TrainSHIELD collision avoidance system, has seen its stock rise by 16% over the past four trading sessions and over 90% in the last year. This surge reflects market optimism regarding the company’s role in the KAVACH initiative. - KEC International
KEC International that works across several industries posted a 54% increase over the past 12 months. The company has separate division dealing with signalling and telecommunication installs which make it ideal candidate to bag more business as capex in railway expands.
- HBL Engineering
- Railtel Corporation and Quadrant Future Tek are as follows:
Quadrant Future Tek has outperformed other stocks in the list and the company has gained an amazing 104% in only four trading sessions after the IPO. The recently signed agreement with RailTel for implementing k- Kavach project and receiving ₹978.6 crore order from Chittaranjan Locomotive Works projects it as a dominant firm.
- Railtel Corporation and Quadrant Future Tek
Quadrant Future Tek has emerged as a star performer, delivering a remarkable 104% return within just four trading sessions post-listing. The company’s partnership with RailTel for KAVACH implementation, coupled with a ₹978.6 crore order from Chittaranjan Locomotive Works, positions it as a leading player in the sector. - Bharat Electronics Limited (BEL)
A defense PSU, BEL also ventures into non-defense areas like rail and metro systems. Its Real-Time Train Information System (RTIS) complements the KAVACH program, contributing to its 47% share price appreciation over the past year. - Siemens
With its expertise in automation and railway systems, Siemens is expected to play a critical role in the modernization of India’s railway infrastructure under the KAVACH initiative.
Sector Outlook
Nuvama Research remains optimistic about the railway sector, anticipating a surge in capital expenditure during the second half of FY25. The firm highlights a pre-election slowdown in public capex during H1 but expects momentum to return with large-ticket orders in railways and other key infrastructure sectors like power and defense.
Gaurav Garg, Research Analyst at Lemonn Markets Desk, underscores the growth potential of the train control systems market. He attributes Quadrant Future Tek’s success to its strategic partnership with RailTel and recent order wins.