Rail Vikas Nigam shares surge 7% — here's why

“These stocks are as cheap as defence stocks were couple of years back. They all trade at single-digit multiples with about 5-6 percent yields. So if the government wants to increase capex, transportation and infrastructure in the country, it will express it through these railway companies," Damani said.

Rail Vikas Nigam is a 100 percent owned PSU of the Ministry of Railways. Raising extra-budgetary resources and implementation of projects relating to creation and augmentation of capacity of rail infrastructure on fast-track basis are its objectives.

An infrastructure project execution company, RNVL undertakes project development, financing and implementation of rail infra projects. Its present functioning is along the lines of a project management company.

The company of late has moved towards the road infrastructure segment as well.

Earlier this month, RVNL had bagged a contract for the construction of a four-lane highway in Andhra Pradesh from the National Highways Authority of India (NHAI).

RVNL's Director-Operations Rajesh Prasad told CNBC-TV18: “It is only one year back we decided that we should have the verticals in the road sector and we should start bidding in the market. We opened a business development cell; our costing cell was part of this. We strengthen the design cell. We are in the process of making the procurement cell. We have made one legal cell. So we are fully prepared to enter into the market," he said.