In a recent market rally, several railway infrastructure companies in Bharat have witnessed significant gains, with RVNL leading the pack with a remarkable 15.47% increase in its stock price, reaching Rs 281.40. Other notable performers include IRCON, IRFC, RITES, Railtel, and IRCTC, which have seen gains ranging from 5.2% to 8.85%.
HDFC Securities, in its latest report, highlighted RVNL as a crucial player in the development of railway infrastructure in India. Functioning as a project executing agency for the Ministry of Railways, RVNL has showcased a robust order book visibility and diversified into non-railway projects. Over the past two years, the company secured orders worth Rs 32,000 crore through competitive bidding.
Moreover, RVNL has expanded its footprint beyond India, undertaking projects in Maldives and signing a Memorandum of Understanding (MoU) with the Government of Kyrgyzstan. This strategic move into other geographies aligns with the company’s efforts to reduce its dependence on Ministry of Railways nominations.
One key strength of RVNL lies in its asset-light business model, which helps maintain a lower fixed asset base, resulting in a stress-free balance sheet and lower inventory days. The company has also ventured into consultancy services, a move that is expected to contribute to margin expansion, as noted by HDFC Securities.
As of the end of Q2FY24, RVNL boasts an impressive order book of Rs 67,000 crore, providing a visible pipeline for the next three years. The company’s strong balance sheet and robust operating cash flows further reinforce its financial stability and growth potential.
Overall, the positive market sentiment towards these railway infrastructure companies is rooted in their strategic diversification, strong order book positions, and sound financial fundamentals. Investors are closely monitoring these developments as the companies continue to play a pivotal role in shaping the future of railway infrastructure in Bharat and beyond.
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