Navratna PSU company, RITES Ltd gains over 3% in the trading week from September 9-13 on BSE, ahead of its double rewards. RITES is set to offer eligible shareholders a Rs 5 dividend per share and bonus issue in the ratio of 1:1. YTD, the stock has advanced by 38.4%. Brokerage has recommended to Accumulate for a target ranging from Rs 760 to Rs 780.
RITES Share Price:
The PSU railway stock ended at Rs 695.50 apiece last week on Friday, with gains of 2% on BSE with a market cap of Rs 16,713 crore. The stock's 52-week high and low is Rs 826.15 apiece and Rs 432.65 apiece.
Date from BSE showed that RITES's price-to-equity ratio is at 39.50x, while its price-to-book ratio is at 6.67x. Meanwhile, the return on equity on the stock is a whopping 16.88%.
RITES is a multi-bagger with gains of more than 190% in a 5-years span.
RITES Dividend:
The Navratna company 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 47.5% valued 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 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 RITES Stock:
After the Q1FY25 report, Way2Wealth stated that as per RITES management, the overall margins are likely to be in the range of 18-20% with Consultancy margin at 35-40%, Exports margins at 20% and Turnkey margins at 2.5-3% in coming years. It trying to strengthen the International Quality Assurance segment; currently venturing for more opportunities in countries like UAE, Saudi, Oman, Qatar etc.
Further, the brokerage said, pickup in the Exports segment is expected from 2HFY25 as the supply of loco/coaches to Mozambique (10 Nos) & Bangladesh (10 types of 200 coaches) will begin from Q4FY25 or Q1FY26.
Also, it added, "Orderbook stood at Rs 63.55bn as of Q1FY25-end (+11% YoY) with break up as follows: 39% from the Consultancy (~Rs 25bn), 37% from the Turnkey (Rs 23.51bn), 19% from the Exports (Rs 12.02bn), 3% from the Leasing (Rs 1.9bn), and 2% from the REMCL segment. 61% of the projects in the order book are competitive and the balance is through nomination bidding.
On valuation, Way2Wealth added, "RITES's Q1FY25 witnessed a decline in profits due to a fall in revenues in QA, Consultancy-Abroad and Exports. It focuses on getting more order orders both on the domestic and export side which have high margins. Its continuity to focus on achieving one order per day with more big-ticket projects augers well for FY25. Given the continuous focus on Railway and Road capex in the Final Budget 2024 has thrown open massive opportunities providing revenue and profit visibility as it has a presence across 13 different industry streams. Hence, we view it as ACCUMULATE stock with a fair value of Rs 760-780."
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.
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