RVNL Shares Surge 8% on Positive News: MoU with Israeli Firm, Arbitration Award
RVNL shares witnessed a sharp rally on Friday, August 23, 2024, surging over 8% on the back of two major positive developments. The company signed a Memorandum of Understanding (MoU) with United Construction Limited, Israel to collaborate on railway and infrastructure projects in Israel. Additionally, RVNL’s joint venture, Krishnapatnam Railway Company Limited (KRCL), received a favorable arbitration award of ₹584.22 crore in a dispute with the Ministry of Railways.
The MoU with United Construction Limited aims to jointly secure projects in the fields of railways, MRTS, tunnels, roads, bridges, building works, airports, ports, irrigation, power transmission and distribution, solar, and wind sectors in Israel. This strategic partnership is expected to open up new avenues for growth and diversification for RVNL.
Furthermore, the arbitration award in favor of KRCL, in which RVNL holds a 49.76% stake, is a significant win for the company. The award settles the long-standing dispute between KRCL and the Ministry of Railways, providing a much-needed boost to RVNL’s financials.
RVNL Financial Performance
RVNL reported a 35% decline in consolidated net profit to ₹224 crore for the first quarter ended June 2024, compared to ₹343 crore in the same period last year. Revenue from operations also fell 27% to ₹4,074 crore during the April-June 2024 quarter, down from ₹5,572 crore in the corresponding quarter of the previous year.
On a sequential basis, net profit declined 53% from ₹478 crore posted in the preceding March quarter, while revenue from operations dropped 39% quarter-on-quarter from ₹6,714 crore in the March 2024 quarter.
Despite the recent decline in financial performance, RVNL’s stock has delivered multibagger returns of over 200% year-to-date and has surged 350% in the past one year. The stock is currently trading at ₹566.5, up 9.3% on the day.
Analysts’ Outlook
Analysts remain cautiously optimistic about RVNL’s prospects, with a majority maintaining a “Hold” rating on the stock. The company’s strong order book, diversified project portfolio, and focus on execution are expected to drive growth in the long term.
However, investors should closely monitor the company’s ability to maintain profitability and manage project risks amidst the challenging economic environment. The successful execution of the MoU with United Construction Limited and the efficient utilization of the arbitration award will be crucial in determining RVNL’s future performance.
