Rail Vikas Nigam Limited hits Upper Circuit after State transferred Ownership

RVNL shares experienced a 20% surge, hitting an intraday trading high of Rs 105 on Tuesday at the National Stock Exchange (NSE), after state ownership transferees transferred 12% of equity holdings in this state-owned firm. RVNL stock has seen a 37% surge since April 21, 2023 – when its share price stood at Rs 76.90 on the National Stock Exchange (NSE). Exchange data show that roughly 251 million equity shares, representing 12% of RVNL’s total equity portfolio have traded hands by 02:58 PM today on NSE.

RVNL provides turnkey solutions and oversees every stage of project development from conception to commissioning, including design, cost estimation, contract calling/awarding process management and project/contract administration services. RVNL employs an asset-light business model, helping it maintain lower fixed assets and stress-free balance sheets, leading to decreased inventory days. RVNL works for and on behalf of MoR as a project execution agency and boasts an impressive order book which should play a vital role in India’s railway infrastructure development.

RVNL anticipates annual compound annual revenue growth in excess of 20% over the coming years, supported by its robust order book and increased order inflows. Recently, RVNL outbid Russian firm Transmashholding for the production and maintenance of 200 lightweight Vande Bharat trains; their bid was approximately Rs 58,000 crore. RVNL and Siemens India consortium emerged as low bidder for Mumbai Metro Line 2B estimated to cost an estimated total cost of Rs 378.16 crore.

Indian Railways recently unveiled its National Rail Plan 2030 (NRP 2030), with an aim of developing a “future-ready” railway system by 2030 and increasing the modal share of freight traffic by 45%. RVNL, having over two decades’ experience executing railway projects in India, has recently started participating in tenders abroad to diversify revenue geographically while decreasing risk and dependence on Indian Railways.

The government has expressed an interest in creating competition among public sector undertakings (PSUs) for allocation of work by the Railway Board, which could alter order flows to an extent. Improvement of rail transportation infrastructure by adding new lines, doubling existing ones and electrification should provide a steady source of business to HDFC Securities; analysts from HDFC Securities believe execution of large projects on low bases could propel growth higher over time; yet HDFC Securities estimates its share prices to have traded above their fair value bull case of Rs 86.50 per share despite trading above its bull case fair value fair value of Rs 86.50.

 

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