IRCON International and RITES soar up to 7.2% after receiving ’Navratna’ status

Shares of IRCON International, a PSU firm, jumped 7.2% to ₹143.75 apiece in early Friday trade after the company in an exchange filing on Thursday said it was awarded 'Navratna' status by the Department of Public Enterprises.  This makes IRCON the 15th Navratna company among the Central Public Sector Enterprises (CPSEs), as per the company's exchange filing.

Furthermore, the Department of Public Enterprises also granted the 'Navratna' status to another PSU, RITES, making it the 16th Central Public Sector Enterprise (CPSE) to receive this prestigious recognition.

Following this development, shares of RITES also zoomed nearly 7% in Friday's early trade to ₹506.30 apiece. At 12:00 p.m., shares of IRCON International and RITES were trading with gains of 6.54% and 5.94%, respectively.

Over the past year, the stocks of public sector undertakings (PSUs) have experienced a significant uptrend. This surge can be attributed to robust order books, strong earnings, and an increase in government capital allocation, as seen in the recent Union Budget. Notably, the S&P BSE PSU index has advanced by an impressive 40.69% in the past year, with 25 stocks yielding returns of over 90%.

In this context, IRCON International has been a standout performer, delivering a stellar yearly return of 236.6%, securing the fifth position among the top gainers in the index. In addition, RITES has also displayed a strong performance, ranking 36th in the index with a yearly return of 44.3%, Trendlyne data showed.

Meanwhile, earlier in April, RVNL was also awarded 'Navratna' status. The 'Navratna' companies are typically selected based on their financial performance, operational efficiency, and strategic importance to the Indian economy. These companies are given more freedom in making decisions related to investments, joint ventures, mergers, and acquisitions.

Other companies that hold the 'Navratna' status are Bharat Electronics, Shipping Corporation of India, Hindustan Aeronautics, Rashtriya Ispat Nigam, Engineers India, NMDC, National Buildings Construction Corporation, ONGC Videsh, NLC India, Oil India, Mahanagar Telephone Nigam, National Aluminium Company, and Container Corporation of India.

Navratna companies can achieve ‘Maharatna’ status by meeting specific performance benchmarks and fulfilling certain eligibility criteria. 

Earlier in September, IRCON International executed the contract agreement with Sri Lanka Railways, Ministry of Transport, for the work of procurement of the design, installation, testing, commissioning, and certifying of the signalling and telecommunication system from Maho Junction (including) to Anuradhapura (excluding) under the Indian Line of Credit at a total price of $14.89 million, equivalent to approximately ₹122 crore, according to company's regulatory filing. 

Domestic brokerage firm Antique Stock Broking has recently initiated coverage on the stock with a 'buy' rating and a target price of ₹176 per share, implying an upside of over 21.37% from the stock's latest closing price.

On the other hand, RITES emerged as the lowest bidder in a tender floated by Bangladesh Railway, the company said in an exchange filing dated October 5. The order pertains to the procurement of 200 broad-gauge passenger carriages for the Bangladesh railway. The estimated value of the contract is over $111.3 million, or more than ₹900 crore. 

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