RVNL Shares Rises 3% on Securing ₹311.2 Crore Central Railway Project

On November 15, during early trading hours, Rail Vikas Nigam (RVNL) recorded a 2.80% jump in its share price following the announcement of securing a Letter of Acceptance (LoA) for a project valued at ₹311.2 crore. This positive development had an immediate impact on the company's stock price, which rose to ₹161.30 on the Bombay Stock Exchange (BSE).

Project Details

The LoA pertains to the construction of four tunnels spanning a total length of 1.6 km, featuring ballastless tracks, earthwork in formation, and the construction of important and minor bridges. The project, issued by Central Railways, is set to be completed within 18 months and covers the Dharakoh Maramjhiri section in connection with the third line.

Previous Orders

In October, RVNL-MPCC (JV)  received another LoA for engineering works and the supply of 50 mm machine-crushed stone ballast. This order, valued at ₹245 crore, involves complete track works, including linking, as part of the gauge conversion work between Nadiad-Petlad in the Vadodara Division on Western Railway. Additionally, the company secured a similar work order from Western Railways for the Petlad-Bhadran stretch (22.5 km) of the Vadodara division, valued at ₹174 crore. Both of these orders are slated for completion in 24 months.

Financial Performance

RVNL reported a 3.5% increase in its consolidated net profit for the quarter ending September 2023, reaching ₹394.4 crore this marks a 15% sequential rise from ₹343 crore in the preceding quarter. However, the company’s revenue from operations declined nearly 12% from Q1FY24, which stood at ₹5,571.57 crore.

Stock Performance

Over the past month, the shares of RVNL have experienced a decline of approximately 4%. Despite this short-term dip, a broader perspective reveals a more optimistic trend. In the last six months, the stock has demonstrated a rise, recording a positive growth of 34%. Expanding our analysis to a one-year timeframe, investors have seen a remarkable 150% return on their investment.

However, the true highlight emerges when we deep dive into the last five years stock performance. Over this extended period, RVNL's shares have proven to be an exceptionally rewarding investment, boasting an impressive 700% return for its investors. This substantial gain over the long term underscores the stock's ability to generate substantial returns and solidifies its position as a lucrative choice for investors with a longer investment horizon.

From a technical standpoint, RVNL shares reached a peak of ₹200 in September 2023. Since that high point, the stock has experienced profit booking, hitting a low of  ₹142 in October 2023. As of the current moment, RVNL shares are trading at ₹159. While there has been a recovery of approximately 14% from the October low, the stock is still exhibiting signs of weakness on the daily timeframe.

The recent price movement suggests that, despite the partial recovery, there is a lingering bearish sentiment in the market. The weakness observed on the daily timeframe may indicate a cautious approach among investors, with potential concerns influencing the stock's performance.

Final Words

The recent surge in RVNL's stock is indicative of its continued success in securing significant projects and maintaining a positive financial trajectory. With multiple projects in its portfolio and solid financial performance, RVNL seems poised for further growth and success in the railway infrastructure sector.