RVNL shares climb 12% on strong volume; up 50% in 2024

Shares of Rail Vikas Nigam Limited (RVNL) resumed their upward climb on Monday after a day of weakness on Friday amid spurt in volume trade. The railway stock has risen nearly 12% intraday today, erasing Friday’s losses of 3%, while it surged 22.5% in the last five sessions after the company, in a post earnings call, said that its order booked crossed ₹65,000 crore. The stock price has moved up by 50% in the calendar year 2024, scaling multiple new lifetime highs amid strong order book position, positive outlook for the railway sector, coupled with the government's impetus on infrastructure development.

On Monday, RVNL shares opened higher at ₹254.60, up 1.2% against the previous closing price of ₹251.60 on the BSE. Extending opening gains, the PSU stock gained as much as 11.86% to ₹281.45 amid strong volume.

At 1:35 PM, shares of RVNL were trading ₹268.80, up 6.84%, with 26.3 lakh stock changing hands over the counter compared to the two-week average of 22.62 lakh scrips. The market capitalisation of the largecap stock stood at ₹56,045 crore.

Last month, RVNL share, which made its stock market debut on April 11, 2019, hit its life-time high of ₹345.60 on January 23, 2024, rebounding 515% from its 52-week low of ₹56.15 touched on March 1, 2023. In the last one year, the stock has risen over 300%, while it increased by 116% in six months despite a correction of over 7% in a month. The stock has seen some correction in the recent past as investors booked profit at higher levels.

The strong demand for RVNL shares can be attributed to significant execution capabilities in the railway segment and its strong order book position as well as low counterparty risk due to backing by the government of India. Currently, the government of India holds 72.84% equity in RVNL, the construction arm of the Ministry of Railways, following the dilution of 5.36% stake in Q1 FY24 to meet the minimum public shareholding requirement as per regulatory requirements for listed companies.

Established in 2003, RVNL received Mini Ratna public sector undertaking (PSU) status in 2013 and was upgraded to ‘Navratna’ status during FY23 by the department of public sector enterprises (PSE). For the third quarter ended December 31, 2023, RVNL reported a decline of 6.2% in net profit at ₹358.6 crore, compared to ₹382.4 crore in the year ago period. The revenue from operations fell 6.4% to ₹4,689.3 crore as against ₹5,012.1 crore in the same period last year. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) slipped 9.6% YoY to ₹249 crore in Q3 FY24, while EBIT margin stood at 5.3% versus 5.5% in the same period last year.

The management, in its post-earnings conference call with investors, said that RVNL’s turnover crossed ₹15,000 crore marks for the first time in FY23-24, while its order book touched ₹65,000 crore, which roughly constitutes 50% from the typical railway projects.     

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