Railway PSUs RITES and RVNL Surge Over 10% on Winning Major Orders

Shares of Railway PSUs, RITES Ltd. and Rail Vikas Nigam Ltd. (RVNL), increased significantly on Monday, November 25. This surge happened after the companies provided updates on major project orders received by them. RITES climbed approximately 12.6%, reaching the day’s high of ₹310.0, while RVNL saw around 10.1% rise to ₹462.9. Both stocks have rebounded from their recent lows, driven by positive news flow on large-scale contracts.

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On Friday, RITES informed the stock exchanges about a major development in its railway electrification project for the Limding-Badarpur line. The Northeast Frontier Railway revised the project’s total cost to ₹531.7 crore (excluding GST), a significant increase from the initial estimated cost of ₹288.44 crore. This revised value also includes the Project Management Consultancy (PMC) fee, which reflects RITES’ strengthened role in the project.

RITES has maintained a strong growth trajectory in securing new contracts. During the second quarter, the company achieved an impressive milestone, bagging over 90 orders, averaging one order per day. This momentum has continued into the third quarter, with the company already securing orders worth ₹650 crore.

In the previous month, the company has diversified its portfolio with several notable contracts including, a ₹36 crore order from Delhi Metro Rail Corporation for retrofit work and a ₹59.13 crore project from the UP State Bridge Corporation, for overseeing a range of Uttar Pradesh infrastructure projects. RITES has also recently signed key Memorandums of Understanding (MoUs) with SAIL-Bokaro Steel Plant for railway infrastructure and Etihad Rail to support infrastructure development in the UAE.

Rail Vikas Nigam Ltd (RVNL) also shared significant updates, announcing on Friday that it has received a Letter of Acceptance (LoA) from the Eastern Railway. The ₹837.67 crore project involves various civil works, including earthwork, bridge construction, railway track laying over 55.2 kilometers, and other ancillary activities between Kalipahari and Pradhankhunta. The project is to be executed within 36 months, with RVNL holding a 74% stake in the consortium that won the contract.

Additionally, RVNL recently emerged as the lowest bidder for a massive Bharat Sanchar Nigam Limited (BSNL) project valued at ₹5,008.20 crore. The contract includes construction work over three years and a ten-year maintenance period. RVNL, along with its consortium partners, HFCL and Aerial Telecom, will determine its exact share in the project soon.

However, RVNL reported a 27% year-on-year decline in net profit to ₹286.9 crore in the September quarter, down from ₹394.3 crore a year ago. The decline was attributed to reduced earnings and operating margins, though its strong order inflow provides a positive outlook for future growth.

In Conclusion

The recent surge in shares of RITES and RVNL underscores the market’s confidence in their healthy project pipelines and ability to secure large-scale contracts. With strategic diversification, increased project values, and new MoUs, both companies are positioned for sustained growth in the railway sector. While RVNL faces margin challenges, its steady inflow of orders, including its significant role in the BSNL consortium, strengthens its prospects. Investors remain optimistic as these Railway PSUs continue to build momentum.