RVNL shares slide despite securing new order; fall over 7% post Budget

Shares of Rail Vikas Nigam Limited (RVNL) declined over 2% on Thursday, in sync with weak broader market, even after the state-owned railway company bagged an order worth ₹191.53 crore from South Eastern Railway. The multibagger stock, which has risen over 200% this year, has plunged over 7% in three days as investors booked profit at higher levels after the Budget announcement failed to meet the railway sector's key priorities. Much to the disappointment of the railway sector, Finance Minister Nirmala Sitharaman didn't mention any big allocation for railways. The Indian Railways is set to receive capital allocation of ₹2.52 lakh crore for the financial year 2024-25, up 5% from ₹2.4 lakh crore a year ago, which was proposed in the Interim Budget in February this year .

Paring the previous session gain, RVNL shares declined 2.5% to hit an intraday low of ₹578.25 on the BSE. Early today, the railway stock opened lower at ₹590.95 after ending 0.46% higher at ₹593.40 in the previous session. On the budget day, the largecap stock closed sharply lower by 5.3%.

At the time of reporting, RVNL shares were trading 1.85% lower at ₹582.45, with a market capitalisation of ₹1.21 lakh crore.

Ahead of Budget, the stock touched its all-time high of ₹647 on July 15, 2024, surging nearly 3-fold against its 52-week low of ₹119.75 hit on July 28. 2023. The stock has risen 92% in six months and nearly 43% in the past one month.

In an exchange filing last evening, RVNL, which comes under the Ministry of Railways, said that it received a contract from South Eastern Railway to meet 3,000 MT loading target on EPC mode. The contract covers design, supply, erection, testing & commissioning of 132 KV traction in 2x25KV System on Rajkhaswan- Nayagarh-Bolani section of Chakradharpur division of South Eastern Railway.

As of March 31, 2024, the order book of the company stood at ₹85,000 crore. In FY23-24, it completed 12 projects and the cumulative completed projects stood at 152 at the end of the March quarter of FY24.

For the full financial year FY24, RVNL clocked a revenue growth of 7.15% at ₹21,889 crore, while profit grew 17.94% to ₹1,575 crore as compared to the previous fiscal. The management in the earnings call said, “We want to grow the top line at a rate of around 5% to 7%. And to grow like this, all the time we want to maintain an order book of around ₹75,000 crore to ₹1 lakh crore. ₹1 lakh crore is an aspirational target.”  

The board of the company also declared a final dividend of ₹2.11 per share (i.e. 21.10%) for the financial year 2023-24, subject to shareholders’ approval. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)