240% Gains, 0.72% Dividend Yield: This Multibagger Railway PSU Stock Soars On Multiple Oder Wins; BUY?

Shares of RailTel Corporation of India continued their upward trajectory, bolstered by a series of significant order wins, signalling robust growth prospects for the information and communication technology (ICT) giant.

RailTel's shares surged by 8% during Monday's trading session, reaching Rs 378.70 apiece, following the announcement of a Rs 352 crore order secured from the Municipal Corporation of Greater Mumbai. The contract entails the supply, installation, testing, commissioning, operations, & maintenance of HMIS for the Health Department of BMC, marking the third substantial order received by RailTel within a week.

The company's winning spree commenced with a Rs 130 crore work order from the Bihar Education Project Council for the supply of teaching-learning materials for Class I to V, swiftly followed by a significant Rs 113.46 crore contract from the Odisha Computer Application Centre to establish IP-MPLS network connectivity in Odisha under OdishaNet Phase 1.0. Additionally, RailTel secured an Rs 87.85 crore work order from the State Transport Authority, Odisha, aimed at upgrading existing command control centres and implementing an intelligent enforcement management system.

These consecutive order wins have significantly bolstered RailTel's market performance, with its shares gaining nearly 14% over the past two trading sessions. Notably, the stock concluded CY23 with a multi-bagger return of 166% and has surged by an impressive 283% from its issue price of Rs 94 per share.

RailTel Corporation of India, classified as a "Mini Ratna (Category-I)" Central Public Sector Enterprise, stands as one of India's foremost providers of ICT services, boasting an extensive optic fibre network that spans over 61,000 route kilometres and connects more than 6,108 railway stations across the nation. Established in 2000, RailTel's primary objective has been to modernize telecom infrastructure, focusing on enhancing train control, operation, and safety systems, while concurrently developing a nationwide broadband and multimedia network.

The company's optic fibre network, strategically laid along railway tracks, not only facilitates enhanced communication and safety systems but also serves as a foundation for generating additional revenue streams. RailTel's urban coverage extends over 21,000 kilometres nationwide.

Despite the recent surge in share price, RailTel remains committed to delivering value to its shareholders, evident in its declaration of an equity dividend of 25.50% for the year ending March 2023, amounting to Rs 2.55 per share. At the current share price of Rs 354.50, this results in a dividend yield of 0.72%.

As of 11:10 am on the National Stock Exchange (NSE), RailTel's shares were trading with gains of nearly 1% at Rs 353.50 per share. Although the stock experienced a 7% dip from opening highs, it continues to trade higher, having gained over 240% in the last year, further cementing its position as a promising player in India's ICT landscape.