Shares of RITES gained on June 7 as the company received a Letter of Award from Tata Steel Limited for loco hiring along with operation and maintenance. The order is worth Rs 39.63 crore (plus GST), the company informed in a regulatory filing.
The order has to be executed by April 20, 2027. Notably, RITES recently reported a mixed set of numbers for the quarter ended March 2024.
Its revenue fell 6 percent year-on-year (YoY) to Rs 643 crore due to poor performance in the exports business and lower revenue in the quality assurance segment set off by growth in the remaining segments.
RITES's EBITDA fell 8 percent YoY to Rs 176 crore and PAT was down 1 percent YoY at Rs 137 crore. The company registered EBITDA margins of 27.4 percent as against 27.9 percent in the year-ago period.
The PSU won orders worth Rs 940 crore in the fiscal fourth quarter (QFY24), more than one order a day during quarter. RITES's overall order book stands healthy at Rs 5,690 crore (excluding Rs 915 crore from export order), giving revenue visibility for the next 2 years, said analysts.
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Its consultancy segment comprises 46 percent of the orderbook, which is a high-margin business. Moreover, analysts at Axis Securities foresee sustainable growth in both the domestic and overseas consultancy business of the company.
Higher capex outlay in the Interim budget 2024-25 for railways and highways has provided the RITES with large opportunities to grow its business verticals, noted Axis Securities.
The company has a robust order book position with a clean balance sheet, high return ratios, and a healthy dividend payout, the brokerage said, adding that it expects RITES to post Revenue, EBITDA and PAT growth of 23 percent, 23 percent and 25 percent CAGR, respectively over FY24-26E.
"We believe that consistency in dividend payout will be maintained. This will also support protecting any major downside risk in the stock," Axis Securities said as it maintained 'Hold' recommendation on the stock with a target price of Rs 715.
In the previous session, RITES shares ended 6.6 percent higher at Rs 647.95 on the National Stock Exchange (NSE). So far this year, the stock has outperformed benchmark Nifty 50, rising nearly 29 percent. In the 12 months gone by, the company has delivered returns of around 70 percent.
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