RVNL shares surge 12% on expansion plans; eyes offshore projects in Central Asia and UAE

Shares of Rail Vikas Nigam (RVNL), a railway infrastructure company, soared nearly 12% to ₹281.30 apiece in early trade on Monday after the company said its order book touched ₹65,000 crore, with 50% of this coming from the railway projects. 

In an investor call, the company said it is looking for new projects in offshore markets, including Central Asia, UAE, and Western Asia. 

"We have got an order book of around ₹65,000 crore, which roughly constitutes 50% from the nomination, that is the typical railway projects and 50% from the market. In time to come, we should maintain an order book of around ₹75,000 crore," top management officials said in reply to the question.

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Of the total order book, the company said that the share of the Vande Bharat trains was around ₹9,000 crore, and ₹7,000 crore was for several metro projects. The company further said it also bagged projects in electrification and transmission lines, among others.

Railway stocks have been performing well on Dalal Street over the last one year, owing to robust order inflows and ongoing transformation in the railway sector. Between March 2023 and January 2024, the stock witnessed a one-way spike, generating a fabulous return of 436%. 

The shares began their upward journey in October 2022 and have since gained 722%. In January 2024 alone, the stock jumped nearly 70%.

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On February 12, the company informed investors through an exchange filing that it emerged as the lowest bidder (L1) from Madhya Pradesh Paschim Kshetra Vidyut Vitran Company for “Supply, Installation, Testing, and Commissioning of a New 11 KV Line for Bifurcation & Interconnection.

In terms of financials, the company reported a YoY drop in both net profit and revenue for the December quarter. Its net profit decreased by 6% to ₹359 crore from ₹382 crore, and there was an 8.8% decline from the preceding quarter's net profit of ₹394 crore. Additionally, revenue from operations dropped to ₹4,689 crore from ₹5,012 crore, marking a 6.44% decrease.

In the current fiscal year, the government has collected ₹12,504 crore through minority stake sale in 7 CPSEs, including Coal India, NHPC, RVNL, and IREDA. By March, the government expects to mop in a total of ₹30,000 crore from disinvestment.

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In the interim budget 2024–2025, the government sets the disinvestment target for the 2024–25 fiscal at ₹50,000 crore, up from ₹30,000 crore in the revised estimate for the current financial year.

The government has historically missed the disinvestment targets set in budgets, except the 2018–19 and 2017–18 financial years, as per the PTI report. 

The highest ever mop-up from disinvestment at ₹1,00,056 crore was recorded in 2017-18, marginally exceeding the budget target of ₹1 lakh crore. In 2018–19, the government collected RS 84,972 crore from CPSE disinvestment, higher than the ₹80,000 crore pegged in the budget for that year, the report said. 

In terms of budget allocation, the government announced a capital outlay of ₹2.55 lakh crore in the Interim Budget, which is an improvement of 6.25% compared to the capital outlay of ₹2.40 lakh crore announced in the Union Budget of 2023-2024.

At 11:00 am, the stock was trading with a gain of 10.17% at ₹277.30 apiece. 

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