Shares of RVNL continued upward movement on August 13 even as the company reported a weak set of numbers for Q1FY25. Today's rise comes as investors remained upbeat after MSCI August review saw RVNL inclusion in the India index that could result in inflows of over Rs 1,800 crore.
The company posted a 35 percent decline in consolidated net profit to Rs 224 crore for the quarter ended June 2024. Its revenue declined 27 percent on-year due to a slowdown in overseas sales from the Maldives, a shortage of available labour, and delays caused by shifting focus to elections, which affected land and approval processes.
As a result, RVNL's EBITDA fell 48 percent YoY to Rs 180 crore, with an EBITDA margin of 4.5 percent compared to 6.3 percent in 1QFY24. However, the railway PSU's management has guided that one-off has impacted the results and execution should improve from the next quarter onwards. The company expects to FY25 with flattish revenue versus FY24.
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According to analysts at Antique Stock Broking, RVNL's order book at Rs 83,200 crore (4x TTM revenue) continues to provide visibility. However, the brokerage is cautious about the stock as they resumed coverage with a “sell” rating with a price target of Rs 283.
Analysts admitted that RVNL had an exceptionally strong execution (revenue) until FY22. But annual execution (revenue) over FY23-25E is largely flattish.
"Order win and change of scope in existing order book has been there and order book too is largely same in the last two years. Over FY25-27E, we have modelled order wins to match execution and this implies a stagnant order book," said Antique. RVNL has signed MoUs but the actual outcome in terms of opportunity size is still unknown, it added.
RVNL stock valuation (EPC business) at 62x 1HFY27E EPS is pricing in an upside to CMP. "We resume coverage with SELL rating. Risk to our rating is execution uptick and order wins," the brokerage said.
At 12:07 pm, RVNL shares were trading over 1 percent higher at Rs 585.60 on NSE. So far this year, the stock has surged 222 percent, massively outpacing the Nifty 50, which gained over 12 percent during this period. Over the past year, the multibagger PSU stock has delivered stellar returns of around 364 percent compared to Nifty's returns of 25 percent during this period.
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