RVNL: Dividend Paying Railway PSU Stock Surges 70% In January Alone; Order Book Hits Rs 65,000 Crore

Rail Vikas Nigam Limited (RVNL) witnessed a 12% spike in its shares to Rs 281.30 per share as it announced an order book of Rs 65,000 crore. A significant portion of this comes from railway projects, setting the stage for the company's robust future.

In an investor call, RVNL's top management revealed their ambitious plans for the future, aiming to explore new projects in offshore markets. Central Asia, UAE, and Western Asia are among the areas the company is eyeing for expansion. Responding to inquiries, officials confidently stated, "In time to come, we should maintain an order book of around Rs 75,000 crore."

RVNL disclosed a breakdown of its impressive order book, highlighting that Vande Bharat trains constitute Rs 9,000 crore, while Rs 7,000 crore is allocated for various metro projects. The company has also secured projects in electrification and transmission lines, reinforcing its diversified portfolio.

The surge in RVNL's shares is part of a broader trend in the railway sector, with stocks on Dalal Street delivering outstanding performances. Over the past year, RVNL's stock witnessed an astonishing one-way spike, generating a staggering return of 436%. Since October 2022, the shares have experienced a remarkable gain of 722%, with January 2024 alone witnessing a 70% increase.

The momentum continued on February 12, as RVNL emerged as the lowest bidder (L1) for the "Supply, Installation, Testing, and Commissioning of a New 11 KV Line for Bifurcation & Interconnection" project from Madhya Pradesh Paschim Kshetra Vidyut Vitran Company.

Despite its robust market performance, RVNL reported a year-on-year drop in both net profit and revenue for the December quarter. The net profit declined by 6% to Rs 359 crore from Rs 382 crore, with an 8.8% drop from the preceding quarter's net profit of Rs 394 crore. Revenue from operations also decreased to Rs 4,689 crore from Rs 5,012 crore, marking a 6.44% decline.

On the financial front, the government's disinvestment strategy has been underway in the current fiscal year. Through minority stake sales in seven CPSEs, including Coal India, NHPC, RVNL, and IREDA, the government has collected Rs 12,504 crore. By March, it aims to reach a total of Rs 30,000 crore from disinvestment.

Looking ahead, the government has set an ambitious disinvestment target of Rs 50,000 crore for the 2024-25 fiscal year in the interim budget. This marks a substantial increase from the revised estimate of Rs 30,000 crore for the current financial year. While historical data suggests that the government has often fallen short of disinvestment targets, the momentum in recent years indicates a positive trend.

The government's highest-ever disinvestment collection was recorded in the 2017-18 fiscal year, reaching Rs 1,00,056 crore, slightly exceeding the budget target of Rs 1 lakh crore. In 2018-19, it collected Rs 84,972 crore from CPSE disinvestment, surpassing the Rs 80,000 crore target for that year.

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

As of 1:50 pm on the National Stock Exchange (NSE), RVNL shares were trading with gains of more than 7% at Rs 269.70 per share. The stock has achieved an impressive 270% gain over the last year, underlining the company's resilience and growth potential in the dynamic railway infrastructure sector.