IRCON share jumps 6% on winning new order; surges 23% in six sessions

Shares of IRCON International rallied over 6% in early trade on Monday after the engineering and construction arm of Indian Railways bagged a new order worth around ₹1,200 crore. The PSU stock has maintained an uptrend for the last six sessions and gained nearly 23% during the same period.

Continuing its gaining streak, IRCON shares opened higher at ₹258, up 2.9% against the previous closing price of ₹250.80 on the BSE. In the first two hours of trade so far, the midcap stock rose as much as 6.4% to ₹266.95, while the market capitalisation increased to ₹24,120 crore. The counter witnessed a surge in buying with volume more than doubling to nearly 18 crore as compared to a two-week average of 8.10 crore scrips.

IRCON, in an exchange filing on April 28, said that its joint venture with Dineshchandra R Agrawal Infracon Pvt Ltd (DRA) - Ircon-DRA JV - has been awarded a contract for the construction of Kottavalasa-Koraput doubling project of Waltair Division, East Coast Railway on EPC (engineering, procurement and construction) mode. The company had quoted a bid price of ₹1,198.09 crore for the project, which needs to be executed within 1,260 days.  

The contract covers the construction of the Kottavalasa-Koraput doubling project from 45.483 Km to 72.550 Km from Shivalingapuram Station to Borraguhalu Station of the Waltair Division.

The share price of IRCON touched its all-time high of ₹280.90 on January 23, 2024, growing nearly 4 times against its 52-week low of ₹73.25 hit on April 28, 2023. The counter has delivered nearly 200% returns in the last year; 85% in six months; and 13% in the past month. In the calendar year 2024, the stock has risen 47%.

The railway stock has turned multi-bagger in the last year as investors remained bullish on the stock amid its strong order book position as well as low counterparty risk due to backing by the government of India. As of December 31, 2023, the total order book of IRCON stood at ₹29,436 crore, with a large chunk (₹21,282 crore) from Railways, followed by Highways (₹6,102 crore).

Overall, railway-related stocks such as IRFC, IRCTC, RVNL, and others have also seen strong rally over the past year amid a positive outlook for the sector, coupled with the government's impetus on infrastructure development in the railways.

In the Union Budget 2024, the government of India increased capital expenditure by 11.11% to ₹11.11 la

In the Union Budget 2024, the government of India increased capital expenditure by 11.11% to ₹11.11 lakh crore, providing tailwinds to the infrastructure sector and the companies engaged in this sector will definitely benefit. The proposed capital outlay of ₹2.55 lakh crore and ₹2.78 lakh crore has been provided for railways and road & highways, respectively, which is the highest ever outlay. Besides, the government has announced the implementation of 3 major railway corridor programmes under PM Gati Sakti to improve logistics efficiency and reduce costs. It is also promoting urban transformation via Metro rail and NaMo Bharat.

In the third quarter ended December 31, 2023, Ircon International, which comes under the Ministry of Railways, reported consolidated total income of ₹3,011.9 crore as against ₹2,421.9 crore in Q3 FY23, a jump of 24.4% year-on-year. EBITDA was at ₹378.1 crore, an increase of 63.2% YoY, while margin stood at 12.6%. The profit after tax increased by 28.8% to ₹244.7 crore compared with ₹190 crore in the corresponding period last year.

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