With a market capitalization of Rs. 329.87 crores, the shares of this prominent construction company started Monday’s trading session on a higher note at Rs.136.45, locking a 1.43 % compared to its previous close of Rs. 135.56 apiece.
Financials:
Looking at RKEC Projects Ltd’s financial performance, the revenue decreased by 44 percent from Rs. 151.33 crores during the March quarter to Rs. 84.67 crores in the June quarter. On the other hand, the net profits declined by around 3 percent from Rs. 5.50 crores to Rs. 5.31 crores during the same timeframe.
Comparing the same metrics on a YoY basis, the revenue zoomed by around 120 percent from Rs. 38.52 crores during Q1FY24 to Rs. 84.67 crores in Q1FY25. In addition, the net profits surged by around 90 percent from Rs. 2.80 crores to Rs. 5.31 crores during the same period.
Defence Construction :
RKEC Projects Ltd is an engineering construction company based in India, with a significant focus on defence construction alongside civil projects.
The company specializes in civil and defence construction, which includes a variety of infrastructure projects such as buildings, highways, bridges, and marine works.
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The company is registered as a Super Special Class contractor with the Ministry of Defence, allowing them to design and execute marine works and other infrastructure projects pertinent to defence. This registration signifies their capability to handle complex projects that meet stringent defence standards.
Furthermore, the company has initiated projects for a wide array of clients, including those in the Defence sector such as MES and DGNP, DRDO, NHAI, NHIDCL, and Indian Railways.
It also serves various ports, including JNPA, CoPT, MbPA, Haldia Dock Complex, GMB, and VPA, as well as clients like Adani Infra India Ltd., Vedanta Ltd., RINL (Rashtriya Ispat Nigam Limited), Petronet LNG Limited, and other Public Works Department.
Their projects often encompass critical infrastructure that can serve dual purposes, including civilian and military applications. This adaptability is crucial in regions where military readiness must align with civil infrastructure needs.
Recently, the company has also bagged an order from Maharashtra Maritime Board for the construction of a passenger jetty and terminal facilities at Radio Jetty near Gateway of India, valued at Rs. 186.68 crores, aimed at enhancing maritime infrastructure for both defence and civilian use.
Management Guidance:
As per the annual report, for FY25, the company is targeting revenue growth of 8-10 percent, driven by new project wins and continued market expansion.
The company aims to sustain its gross profit margins while enhancing operational efficiencies through investments in technology and process improvements.
With the unexecuted order-book of Rs 1,170 crore, the company has strong revenue visibility for the coming years. Moreover, the company has been exploring bids for projects and is expected to add a good amount of fresh orders going ahead.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 11.83 percent and a return on capital employed (RoCE) of 20.26 percent for the period spanning FY23-24. Further, during the same period, the net profit margin stood at 5.65 percent.
Conclusion:
RKEC Projects Ltd is strategically positioned to utilize its expertise in infrastructure development to secure more contracts and broaden its operations.
The recent contract win highlights the growing demand for infrastructure projects in India, especially in urban areas. The government’s commitment to improving infrastructure is expected to create further growth opportunities for the company.
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Written By Vaibhav Patil
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