Fundamentals refers to the financial strength and performance of a company or asset. They provide insights into a company’s ability to generate profits and manage its debt. Key fundamental factors include earnings, revenue, debt-to-equity ratio, net profit margin, ROE, and ROCE.
The Indian Railways’ capital expenditure in the Railway Budget 2023-2024 is Rs. 2.40 lakh crore. Furthermore, the government’s increased investment in railways is motivated by a variety of factors, including the need to increase capacity, modernize infrastructure, and improve efficiency. The government is also committed to promoting sustainable transportation, and railways are seen as a key part of this strategy.
Here list of two fundamentally strong railway stocks.
Engineers India
Engineers India Ltd (EIL) is a small-cap company, founded in 1965, and it is a leading global engineering consultancy and EPC firm owned by the government. Engineering consultancy and EPC services for the oil and gas and petrochemical industries are EIL’s primary focus.
On Friday’s session company’s shares closed at Rs 145.1 per share, a 1.23 percent decrease over its previous close of Rs 146.9. The company has a market capitalization of Rs 8,170 crores.
Looking at the company’s financial statements operating revenues fell 0.4 percent from Rs 793 crores in Q2FY23 to Rs 789 crores in Q2FY24, Furthermore, net profit increased 69 percent from Rs 75 crores to Rs 127 crores during the same period.
The company has maintained zero debt in the last 5 years, reported a Return on Equity (ROE) of 18 Return on capital employed (ROCE) of 24, a Net profit margin of 10.34, and a dividend yield of 2.04 percent. The shares of Engineers India have risen by 31 percent in the last six months and 81 percent in the year to date.
PNC Infratech
PNC Infratech Limited was founded on August 9, 1999, as PNC Construction Company Private Limited. The company works on railways, highways, bridges, flyovers, power transmission lines and towers, airport runways, industrial area development, and other infrastructure projects.
The company’s shares closed at Rs 326.50 per share, a 1.07 percent increase over its previous close of Rs 323.05 on Friday’s session. The company has a market capitalization of Rs 8,380 crores.
According to the company’s financial statements, operating revenues increased by 6.4 percent from Rs 1,795 crores in Q2FY23 to Rs 1,911 crores in Q2FY24. During the same period, net profit also increased by 12 percent, from Rs 132 crores to Rs 147 crores.
The company has reported a Return on Equity (ROE) of 16.6 Return on capital employed (ROCE) of 15, a net profit margin of 8, and the Company’s PE of 11.25 is lower than the Average Industry PE.
PNC Infratech’s stock has increased by 20 percent over the past year and by 4.8 percent over the last six months.
Written by Sriram KV
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