1:1 Bonus Issue + Rs 5/Dividend: Record Date On Sept 20; Navratna PSU Stock Up 120% In 18 Months; BUY/HOLD?

Upcoming Bonus Issue, Dividend: Navratna PSU giant, RITES Ltd double rewards of dividend and bonus issue is the next big reward by a railway company in the sector. The zero-debt stock has gained significantly throughout 2024 and emerged as a multi-bagger with gains of over 120% in about 18 months. Brokerages have broadly recommended BUY and HOLD on RITES share with a target price surpassing the Rs 700 mark. The short-term potential gains in RITES are in single digits.

RITES Share Price:

On September 12, 2024, RITES share price ended at Rs 681.10 on NSE, with a market cap of Rs 16,366.96 crore. The midcap PSU stock's 52-week high and low are at Rs 432.30 apiece respectively.

From its 2024 low, RITES share price is still up by nearly 58%. But as per NSE data, the stock emerged as a multi-bagger with gains of up to 118.8% from its 2023 low of Rs 311.30 apiece that was recorded on February 22 of last year.

Overall, YTD, the stock is up by 35.3% on NSE.

The stock price will be in focus ahead of its double rewards in the form of dividend and bonus issues.

RITES Ltd Dividend:

The Navratna PSU player will reward investors with a final dividend of 50% worth Rs 5 per share in the coming weeks. The record date to determine eligible shareholders is set on September 20, 2024, which is also the ex-dividend date.

Earlier, for FY24, the company paid three interim dividends. The first interim dividend was 45% worth Rs 4.50 per share, while the second interim dividend was of 47.5% valuing to Rs 4.75 per share, and the third interim dividend stood at 25% worth Rs 2.50 per share before the upcoming final dividend.

RITES Ltd Bonus Issue:

The company has also fixed September 20 as the record date to determine eligible shareholders for its bonus issue ratio of 1:1. This will be RITES' second bonus share since 2019.

The ratio of 1:1 means that RITES will issue 1 free equity share on existing 1 equity.

In 2019, on August 8, RITES turned ex-bonus for its bonus shares of 1:4 ratio.

BUY/Hold RITES Ltd Stock:

Brokerage Antique Stock Broking has recommended HOLD on RITES stock for a target price of Rs 707 per share, hinting at nearly 4% potential gains ahead.

Also, as per Trendlyne data, the consensus recommendation from 4 analysts for Rites Ltd. is HOLD. Of the total, only 1 analyst has suggested BUY on RITES, while another suggested SELL. However, two analysts have recommended HOLD. EPS is expected to grow by 1.8% in FY25. The average 1-year target price on RITES is at Rs 708.75 apiece, also signalling over 4% potential gains.

RITES Limited is a Navratna Public Sector Enterprise and a leading player in the transport consultancy and engineering sector in India, having diversified services and geographical reach. The company has experience spanning 50 years and has undertaken projects in over 55 countries in Asia, Africa, Latin America, South America, and the Middle East region.

Earlier this month, RITES signed a Memorandum of Understanding (MoU) with NBCC (India) Ltd., a CPSE under the Ministry of Housing Development, to explore and undertake a comprehensive range of consultancy, fee-based projects, and EPC contracts from concept to commissioning.

As per the deal, RITES will offer Consultancy and Project Management services from conceptualization, planning, design, cost estimation to tender documentation, and other pre-construction activities, along with coordination for construction. While NBCC will offer its expertise for project implementation such as tendering, contract management, construction supervision, cost control, quality assurance, handing over/ commissioning and defect liability period.