RVNL jumps 8% after it secures LoA from Eastern Railway for infra project worth Rs 837 crore

Over the past 3 months, RVNL shares have declined over 26 percent

Shares of Rail Vikas Nigam Limited (RVNL) jumped 8 percent to Rs 455 apiece on November 25 after securing a letter of acceptance (LoA) from Eastern Railway for an infrastructure project worth Rs 837.67 crore. The project involves earthwork, bridge construction, and railway track laying across 55.2 kilometers between Kalipahari and Pradhankhuta.

This multi-tracking broad-gauge railway line project includes earthwork, filling, blanketing, bridge construction, retaining walls, level crossings, and drainage works, with completion expected in 36 months. RVNL clarified that the contract, awarded by a domestic entity, does not involve related-party transactions, and RVNL plays a significant role in the joint venture.

Recently, the company led consortium also emerged as lowest bidder for a Bharat Sanchar Nigam Limited (BSNL) project worth Rs 5,000 crore. The contract will span over a period of three years for construction and 10 years for maintenance. The total value of the contract stands at approximately Rs 5,008.20 crore. The share of RVNL, HFCL and Aerial Telecom in the consortium is yet to be decided.

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In the recently concluded September quarter, RVNL reported 27 percent YoY drop in net profit to Rs 286.9 crore, down from Rs 394.3 crore a year ago, due to lower operating margins and reduced earnings.

Revenue from operations declined by 1.2 percent YoY to Rs 4,855 crore in Q2FY25, while EBITDA fell 9 percent YoY to Rs 271.5 crore, with margins narrowing to 5.6 percent from 6 percent, reflecting operational challenges.

So far this year, the stock of this railway PSU has skyrocketed 131 percent, as compared to 10 percent rise in the benchmark Nifty 50 index. However, over the past 3 months, RVNL shares have declined over 26 percent.