RVNL Shares Surge Over 3% After Securing Rs 739 Crore Order from HPSEBL
Rail Vikas Nigam Limited (RVNL) shares jumped more than 3% on Tuesday after the company announced that it has emerged as the lowest bidder (L1) for a project worth Rs 739.07 crore from the Himachal Pradesh State Electricity Board Limited (HPSEBL).
The project involves the development of distribution infrastructure in the Central Zone of Himachal Pradesh under the Revamped Reforms-based and Results-linked Distribution Sector Scheme (RDSS). The estimated completion time for the project is around 24 months.
RVNL, a state-owned company specializing in railway infrastructure projects, saw its shares hit an intraday high of Rs 626.65, up 3.29% from the previous close. The stock has been on a dream run, surging nearly 1900% and 1980% in the last two and three years, respectively.
The company also announced that its board of directors will meet on August 8 to consider and approve the financial results for the quarter ended June 30, 2024. In the fourth quarter of FY24, RVNL reported a 33.2% year-on-year increase in profit to Rs 478.6 crore.
Analysts remain bullish on RVNL’s growth prospects, citing its expanding infrastructure projects, strategic collaborations, and consistent execution track record. The company has an order book of around Rs 65,000 crore and targets an annual order inflow of Rs 25,000 crore.
However, RVNL faces risks such as project execution delays, reliance on government contracts, regulatory changes, economic slowdowns, funding challenges, increased competition, and cost overruns, which could impact its profitability.
Despite the recent order win, RVNL shares fell marginally on July 25 after the company received a Letter of Acceptance (LoA) for a Rs 191.53 crore project from South Eastern Railway. The stock has a ‘hold’ rating from three analysts, with zero buy or sell calls, according to Bloomberg data.
The rail sector, in general, has seen a sharp decline following Union Budget 2024, as there was limited focus on the sector. Investors had expected substantial funding for railways, but the Finance Minister’s budget speech hardly addressed the sector, leading to a significant decline in the stock prices of RVNL, Ircon International, IRFC, RailTel, and others.
Despite the recent volatility, RVNL remains a key player in the railway infrastructure space, with its strong order book and consistent execution track record. The company’s ability to secure new projects and maintain profitability will be crucial in the coming quarters.
