RVNL Shares Surge 7% After Securing ₹500 Crore Orders, Recover from Election Results Impact

Services

Stock Market Masterclass

Equity Investment with CA Abhay

Option Trading with CA Abhay

FNO Stocks with CA Abhay

Equity Trading with CA Abhay

RVNL Shares Rally After Securing Multiple Orders, Recover from Election Results Impact

Team FS

06/Jun/2024

Key Points:

RVNL shares rise over 7% after securing multiple orders worth over ₹500 crore.
The stock recovers nearly half of its losses from the dip caused by Lok Sabha Election results.
RVNL's strong financial performance and substantial order book underpin investor confidence.

Rail Vikas Nigam Limited (RVNL) shares have extended their gains for the second consecutive day on Thursday, June 6. The stock has risen over 7% in today's trade, signaling strong investor confidence following recent developments and recovery from election-related volatility.

Market Performance and Recent Volatility

On Tuesday, June 4, RVNL shares experienced a significant drop of over 13% as the Lok Sabha Election 2024 results indicated a narrower-than-expected win for the National Democratic Alliance (NDA). This political uncertainty initially weighed heavily on the state-run company's stock. However, RVNL has managed to rebound swiftly, recovering nearly half of Tuesday's losses.

As of today, RVNL shares are trading at a day's high of ₹383.65 apiece, which is just 5% away from Monday's closing price of ₹404.55. The company's market capitalization currently stands at over ₹78,000 crore according to BSE data. This recovery reflects the underlying strength of RVNL's fundamentals and the market's positive outlook on the company's future prospects.

Recent Orders and Business Developments

A key driver behind RVNL's recent stock surge is the announcement of multiple significant orders. On Wednesday, June 5, RVNL disclosed that it received several orders valued at over ₹500 crore.

One major order is from Eastern Railway for the construction of the Sitarampur bypass line under the Asansol Division, valued at ₹390.97 crore. Additionally, RVNL emerged as the lowest bidder for the implementation of SCADA (Supervisory Control and Data Acquisition) and DMS/OMS (Distribution Management System/Outage Management System) works in Gurugram under the Revamped Distribution Sector Scheme (RDSS) for Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVN). This project is worth ₹124.37 crore.

These orders highlight RVNL's strong execution capabilities and its growing presence in the infrastructure and power management sectors. The company’s robust order book, which stood at around ₹85,000 crore at the end of the fourth quarter, underscores its sustained growth trajectory.

Financial Performance and Stock Outlook

RVNL has been a standout performer among railway PSU stocks, delivering impressive returns over the past year. Despite the recent 13.11% fall on Tuesday, the stock has gained 36.83% in the past month, 121.4% in the last six months, and 107.77% so far in 2024.

During the March quarter, RVNL reported a year-on-year increase in revenue, EBITDA, and PAT by 17%, 22%, and 33%, respectively. This strong financial performance reflects the company’s operational efficiency and its ability to capitalize on market opportunities.

For the financial year 2025, RVNL has guided an order inflow in the range of ₹20,000 crore to ₹25,000 crore. The company aims to maintain a book-to-sales ratio between 3x and 4x, which indicates a healthy pipeline of projects and future revenue visibility.

Dividend and Shareholder Returns

In addition to its robust financial performance, RVNL’s board has recommended a final dividend of ₹2.11 per share for the financial year 2023-24, subject to shareholder approval at the upcoming AGM. This dividend, which represents a 2.1% yield on the paid-up equity share capital, will be paid within 30 days of its declaration at the AGM. The dividend announcement is likely to further bolster investor sentiment and reward shareholders for their continued support.

Technical Analysis

From a technical analysis perspective, RVNL's stock shows a mix of bullish and bearish signals. The stock is trading higher than its 50-day, 100-day, 150-day, and 200-day moving averages, which suggests a long-term uptrend. However, it is trading lower than its 5-day, 10-day, 20-day, and 30-day moving averages, indicating short-term volatility.

The Relative Strength Index (RSI) for RVNL stands at a moderate level, suggesting that the stock is neither overbought nor oversold. This balanced RSI supports the view that the recent price movements are driven by fundamental factors rather than speculative trading.

Conclusion

RVNL's recent recovery and stock surge are underpinned by its strong operational performance, significant order wins, and favorable market conditions. The company's ability to secure high-value projects and its robust order book position it well for sustained growth.

As RVNL continues to execute its projects and expand its footprint in the infrastructure sector, investors can expect the stock to maintain its upward trajectory. The upcoming dividend payment also adds to the stock's attractiveness, providing an additional incentive for investors.

Looking ahead, RVNL’s performance will be closely watched by market participants, particularly in light of its strategic projects and financial targets for the coming years. The company’s resilience and strategic execution capabilities make it a compelling investment opportunity in the railway and infrastructure space.

Also Read : BHEL Shares Surge 14% on ₹3,500-Crore Order from Adani Power for 1,600 MW Thermal Power Plant

Join our Telegram Channel and WhatsApp Channel for regular Updates.