Rail Vikas Nigam (RVNL) hosted the call with investors and analysts for business updates. Weak order flow has been a major concern for RVNL. For this, the company highlighted, it has bid for orders of 210 billion more out of open tenders 60 billion, it has won orders of 20 billion so far, in a note highlighted brokerage IDBI Capital.
“RVNL guides for order inflow” 150 billion in FY23E. Revenue execution in FY22 was strong, with a growth of 26% YoY and RVNL expects to maintain this in terms of its revenue growth in the mid-term (4-5 years),” the note said.
Brokerage house retains its buy rating RVNL shares with a target price of 42 each, implying a potential increase of approximately 45% from the current stock level.
“RVNL has entered into a large number of MoUs involving both public and private players including Tata, Mahanadi Coalfields Limited, Jaykesem, etc. RVNL expects order inflow 150 billion, including Rs 50 billion from the MoU and nomination,” added IDBI Capital.
RVNL is expected to increase its footprint in the non-railway sector and hence the share from Railways in its order book may decrease in the coming years. Over the last 5 years, RVNL’s revenue was at CAGR of 27% and RVNL guided to maintain the level with a margin of 5-6%.
“We have retained our EPS estimate for FY23/24E but lowered the valuation multiplier for FY24E EPS (earlier 7x) by 6x to arrive at the target price. 42. The stock trades at 4x FY24E EPS and offers dividend yield of 7-8%,” the brokerage said.
The PSU Railway stock is down over 15% so far in 2022 (Year-to-date or YTD), while the stock is down nearly 8% in the one-year period. Rail Vikas Nigam Limited is a PSU company, owned by Indian RailInvolved in building rail infrastructure.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.