RVNL, Ircon International shares tumble up to 7% on weak performance in Q2

Stock Market Today: Shares of Rail Vikas Nigam (RVNL) and Ircon International plunged 7.2 per cent and 6 per cent, respectively, in early morning trade on Friday, November 8 after both state-run railway companies reported weaker-than-expected earnings for the September quarter on Thursday.

RVNL share price hit an intraday low of ₹443.30 apiece, while Ircon share price dropped to ₹202.45 apiece. 

For the September 2024 quarter (Q2 FY25), RVNL, a project service provider, posted a 27.24 per cent year-on-year (YoY) decline in net profit to ₹286.88 crore, compared to ₹394.26 crore in the same quarter last year.

Revenue from operations slipped by 1.21 per cent to ₹4,854.95 crore, down from ₹4,914.32 crore in the corresponding period last year. Sequentially, however, RVNL saw a profit increase of 28.12 per cent and a revenue rise of 19.18 per cent for the July-September quarter.

On the operational side, RVNL reported EBITDA of ₹256 crore, a 14 per cent decline from ₹298 crore posted in Q2 FY24. Margins dropped by 100 basis points to 5 per cent.

Ircon International, in contrast, reported an 18 per cent quarter-on-quarter (QoQ) increase in net profit to ₹206 crore in Q2 FY25, although this was down from ₹250.7 crore in the same period last year. The company’s revenue from operations for the second quarter of the current fiscal decreased by 19.3 per cent to ₹2,447.5 crore from ₹2,987 crore in the year-ago period.

Ircon's EBITDA for the September quarter stood at ₹201 crore, compared to ₹216 crore a year ago, while its margin expanded slightly to 8 per cent from 7 per cent.

On the outlook, IRCON International said, “India is on a path to expand its transportation infrastructure, with a significant focus on roadways, railways, and airports. The government drives infrastructure development through strategic initiatives, such as PM Gati Shakti, the National Logistics Policy, the Bharatmala and Sagarmala Projects, the Pradhan Mantri Awas Yojana, and the Smart Cities Mission."

Earlier this week, Indian Railway Finance Corporation (IRFC) also reported muted performance for Q2 FY25, with revenue from operations reaching ₹6,898 crore, a 2 per cent YoY increase from ₹6,761 crore in the same quarter last year. Net profit rose to ₹1,612 crore, up from ₹1,544 crore in Q2 FY24, representing a 4.4 per cent improvement.

Stocks down 42% from recent highs

After enjoying a steady rally in recent years, railway stocks are currently facing significant selling pressure, causing them to trade well below their recent highs. Rail Vikas Nigam shares declined 12.5 per cent in September, followed by an additional 11.25 per cent drop in October.

So far in November, the stock has fallen another 4 per cent, leaving it 30 per cent below its recent peak of ₹647 per share.

Similarly, Ircon International shares have been on a consistent downward trend over the past four months, including November. The stock dropped by 10 per cent in August, 12.7 per cent in September, and 4.52 per cent in October.

In the current month, it has shed an additional 6.14 per cent, bringing it 42 per cent below its all-time high of ₹351.60, which it hit in July.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.