This company, which holds a significant name in the railway infrastructure sector, has secured a contract worth INR 135.66 crore from Central Railway. Under this agreement, the company is required to establish a 132/55 KV traction substation, sectioning posts (SP), and sub-sectioning posts (SSP) in the Bhusaval-Khandwa section. The work must be completed within two years. The primary objective of this project is to enhance freight capacity and make train operations smoother and more efficient than before. Here, we are talking about India’s Navratna company, RVNL. Let’s understand it in detail.
A Closer Look at the Project’s Scope and Significance
This latest win aligns with RVNL’s broader vision of modernizing India’s railway network. The project scope includes:
- Designing and installing 132/55 KV traction substations.
- Constructing sectioning posts (SPs) and sub-sectioning posts (SSPs).
- Implementing a 2 x 25 KV traction system with Scott-connected transformers. These are aimed at supporting a 3,000 MT freight loading capacity.
This corridor plays a pivotal role in freight transportation, and with RVNL at the helm of electrification efforts, the project is expected to enhance operational efficiency and reliability.
RVNL’s Growing Order Book
Despite the ongoing market downturn, the company continues to secure one contract after another. The company’s current order book stands at INR 97,000 crore. It does not include the Vande Bharat project because it will contribute to revenue from next year.
Adding to its recent wins, the company secured two major contracts from South Western Railway:
- 2×25 KV OHE & PSI system EPC project worth INR 156.36 crore between Rayadurga and Topavagada, with an 18-month completion deadline.
- Installation of the KAVACH safety system, a substantial INR 355.43 crore deal covering 790 RKM in the Hubballi & Mysuru divisions.
RVNL’s IPO Performance
Rail Vikas Nigam launched its IPO on 29 March 2019, which subscribed 1.6X in four days. The issue size was INR 481.57 crore. However, the listing performance was not very strong, as it debuted at INR 19.05 per share with a marginal gain of 0.26%. However, the stock later gained momentum and reached its first high of INR 1,093.47 per share on 14 October 2021. RVNL touched its all-time high of INR 1,108.95 per share on 18 May 2024, which is an explosive 5,700% increase from its listing price. Currently, it is trading at INR 332.40 per share, which is 70% lower than its 52-week high.
Stock Market Performance: A Rocky Ride
While RVNL is piling up orders, its stock has been struggling under persistent selling pressure. On 29 February 2025, RVNL’s shares closed at INR 332.40, marking a 5.04% drop for the day. The downward spiral has been steep, with the stock plummeting ~14.50% in the past five trading sessions and shedding ~45% over the last six months.
Financial Snapshot: Earnings Under Pressure
RVNL Q3 FY25 earnings reflected some headwinds, with a 13.1% drop in net profit, coming in at INR 311.6 crore compared to INR 358.6 crore in the same quarter last year. Revenue from operations also took a 2.6% hit, slipping to INR 4,567.4 crore.
Key Financial Metrics:
- Market Cap: INR 73,069 crore
- P/E Ratio: 56.07
- Dividend Yield: 0.60%
- 52-Week High: INR 647
- 52-Week Low: INR 213
Despite the recent dip, RVNL has delivered stellar long-term returns, with its stock skyrocketing by 500% over two years and a jaw-dropping 1,500% gain over five years. Institutional investors, including FIIs and LIC, continue to show confidence. Notably, FIIs increased their stake to 5.10% as of December 2024.
Final Thoughts
RVNL’s INR 135 crore order is another trophy on its shelf. The Indian Government’s focus on modernizing railways will surely benefit companies working in this domain. Despite the ongoing bearish market, RVNL’s tremendous order book, historical profitability, and government-backed projects signal a bright future for the company.
The current market sentiment on RVNL remains mixed. Some analysts recommend accumulating on dips, while others advise caution due to ongoing selling pressure and recent tax notices. The key takeaway for high-risk investors is that they might consider buying on dips, while conservative investors should wait until the market turns green. Either way, RVNL remains a stock to watch in India’s railway sector.