Navratna PSU stock backed by the Railway Ministry, RITES Ltd turned ex-dividend last week on November 14. On the ex-date, the stock price witnessed buying sentiment. Brokerage Axis Securities is the latest to recommend BUY on RITES share price on the back of a strong order book and gain in export sales which is expected to drive the company's growth.
RITES Share Price:
Last week, on November 14, which was the ex-dividend date for RITES, the share price of the company ended at Rs 272.90 apiece up by 1.2% on BSE with a market cap of Rs 272.90 crore. The stock's 52-week high and low is at Rs 413.08 apiece and Rs 223.40 apiece respectively.
RITES Dividend:
RITES turned ex-dividend on November 14 for its interim dividend payout of Rs 1.75 per share for FY25. This will be the first dividend for FY25 and also the first after RITES distributed 1:1 bonus shares.
Earlier, the railway PSU company turned ex-dividend on September 20, for its final dividend of 50% worth Rs 5 per share for FY24. Earlier, for FY24, the company paid three interim dividends. The first interim dividend was 45% worth Rs 4.50 per share. In comparison, the second interim dividend was 47.5% valued at 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 Bonus Issue:
RITES turned ex-bonus on September 20, for its bonus issue of 1:1 ratio, meaning, the company allotted 1 free share on existing 1 equity share. The company allotted 24,03,01,887 (Twenty-Four Crore Three Lakh One Thousand Eight Hundred and Eighty-Seven) fully paid-up Bonus Equity Shares of the face value of Rs. 10/- each in the ratio of 1:1.
Axis Securities On RITES:
In its latest research note, Axis Securities said, ": The management did not provide specific revenue guidance but indicated expectations for growth in EBITDA and PAT going forward. Additionally, it signalled an increase in export orders in the future. However, due to higher competitive intensity, margin pressure is expected to persist."
On the valuation, the brokerage added, "We roll over our estimates to FY27 and upgrade our recommendation from HOLD to BUY on the stock." The target price has been set at Rs 325 per share.
In its recommendation rationale, Axis Securities highlighted that RITES has secured 91 orders worth Rs 729 crore in Q2FY25. Its overall order book remains robust at Rs 6,581 Cr, providing revenue visibility for the next 2-2.5 years. The consultancy segment, which is a high-margin business, comprises 38% of the order book.
Axis Securities is expecting sustainable growth in both the domestic and overseas consultancy businesses. The increased capital outlay in the 2024-25 budget for Railways is expected to serve as a growth catalyst for the company.
About RITES:
RITES Limited, a Navratna and Schedule 'A' Central Public Sector Enterprise under the Ministry of Railways, incorporated on April 26, 1974, is a multidisciplinary engineering and consultancy organization, providing a comprehensive range of services from concept to commissioning in all facets of transport infrastructure and related technologies. The company's market capitalization has placed it among the top 500 listed companies in India, a testament to the high-quality solutions and services it delivers, driven by its talented pool of professionals.
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