Buy This Small-Cap Miniratna Stock For Target Price Of Rs 42: IDBI Capital

Stock Outlook & Returns

The current market price of Rail Vikas Nigam Limited stock is Rs 31 apiece. Currently, the stock is trading Rs 3.5 apiece above the 52-week low-level stock, whereas the current market price is Rs. 13.8 apiece below the 52-week high level of the stock. 

In the past 1 week, its share price slid down nearly by 0.16%, while in the past 1 month it moved up roughly 1.8%, respectively. In the past 1 year, it has given a positive return of 6.34%, whereas, over the past 3 years, the shares gave a positive return of 26.22%.
 
 Rail Vikas Nigam Limited is a small-cap stock having a market capitalization of Rs 6,463 crore. The stock's TTM PE ratio is 5.18. The P/B ratio is 35.78. ROE is 18.48%. 
 

 

Q4FY22 Snapshot

Revenue increase of 20% YoY to Rs46bn, is on the strong base when Q1FY22 revenue was up 33% YoY. EBITDA margin was maintained at 6% (vs 5.9% YoY and 6.3% QoQ). PAT saw a growth of 28% YoY on the back of improved margins, along with growth in other income and was slightly negated by increased depreciation and interest costs. 

Diversifying away from Railway

In CY21 Rail Vikas Nigam Limited has started bidding for projects and has participated in tender of Rs250bn. And has won orders of Rs40bn including metro project in Indore, Rs18bn construction of highway in Himachal in HAM, Rs5bn tunneling in NER and few consultancy. Orderbook as on June22 stood at Rs550bn, with Nomination orders at Rs510bn and competitive bided orders at Rs40bn. order book. RVNL plan to bid for Rs500bn of order and Targeting order inflow of Rs100-150bn in FY23 under competitive bidding in ratio of 1:1 in railway and others 

Diversifying order book, buy for a Target Price of Rs 42

"Rail Vikas Nigam Limited Q1FY23 PAT beat our estimates by 16%. It is led by strong revenue increase. Execution is expected to remain strong in FY23E led by order book of Rs 550bn as on June-22. RVNL has submitted bids of Rs250bn orders and further bidding for orders of Rs250bn over the next 7 months in FY23E. Till date it has received orders in competitive bids of Rs40bn and eying total order inflow of Rs100-150bn in FY23E with railway and other sector to contribute equally. We have retained our EPS estimate for FY23/24E and unchanged Target Price of Rs42 (6x FY24E EPS). Stock trades at 4x FY24E EPS and offers dividend yield of 7-8%. Its order book at Rs550bn provides revenue visibility at for the next 3-3.5 years and catalyst for stock is new order win in competitive bidding. We retain BUY rating," the brokerage said.

About - Rail Vikas Nigam Limited

Rail Vikas Nigam Limited is a Category-I MiniRatna CPSE under the Ministry of Railways, Government of India. To bridge the infrastructure deficit on Indian Railways, the then Prime Minister, Bharat Ratna Shri Atal Bihari Vajpayee announced National Rail Vikas Yojana (NRVY) on 15th August 2002 in his address from the Red Fort. NAVY was formally launched by Hon'ble PM on 26th December 2002. To implement NRVY, Rail Vikas Nigam Limited was incorporated as a 100% owned PSU of the Ministry of Railways (MOR) on 24-1-2003 with the twin objectives of raising extra-budgetary resources and implementation of projects relating to the creation and augmentation of the capacity of rail infrastructure on fast track basis. Rail Vikas Nigam Limited became fully functional by March 2005.