The share of this railway company gained up to 3.5 percent from a day high of Rs 231.35 apiece after the company inked a Memorandum of Understanding (MoU) with Patel Engineering Limited.
With a market capitalization of Rs 21,260.36 crore, the shares of IRCON International Ltd were trading at Rs 226.05 per share, increasing around 1.23 percent as compared to the previous closing price of Rs 223.35 apiece.
Reason for rise:-
The company shares have seen bullish movement after IRCON International Ltd inked a Memorandum of Understanding (MoU) with Patel Engineering Limited for collaboration and cooperation with each other to explore, identify, pursue, and jointly execute mutually beneficial business opportunities in various infrastructure projects in India and Overseas.
Financial Performance:-
Looking forward to the company’s financial condition, revenue decreased slightly by 17 percent from Rs 2,764 crore in Q1FY24 to Rs 2,287 crore in Q1FY245 net profit magnified by 19 percent from Rs 187 crore to Rs 224 crore.
Order Inflow & Order Book:-
Recently, IRCON International Ltd received a new order worth Rs 750 crore from Rail Vikas Nigam Limited. The order will be executed within 42 months.
Moreover, the order is for the design, supply, installation, testing, and commissioning of a broad gauge ballastless track between chainage 6+015 (FLS) to 125+200 (FLS) in connection with the New BG line between Rishikesh and Karanprayag (125km) in the state of Uttarakhand.
IRCON International Ltd has a strong order book of Rs 26,034 crore as of June 2024 in which the company received 78.4 percent (Rs 20,420 crore) of orders from railways, 21.2 percent (Rs 5,531 crore) comes from Highways and the remaining 0.4 percent of orders come from others.
The company recorded Rs 1,000 crores in order inflow for Q1, maintaining full-year guidance of IRs 10,000 to Rs 12,000 crores. Projects previously on hold are progressing post-elections, with a focus on EPC projects in railways and PPP initiatives in roads contributing to expected inflows.
Renewable energy initiative:-
The company’s solar PV project is advancing, with 80% of land acquired and 50 MW of capacity commissioned. The total project cost is INR 2,760 crores. Due to GST changes, the PPA rate has been revised from Rs 2.45 to INR 2.57 per unit.
Competitive Landscape and Margin Guidance:-
Management recognizes rising competition, which may require aggressive bidding, but aims to maintain a PAT margin of 7% to 7.5% in the short- to mid-term. Core EBITDA margins are expected to stabilize at 6.5% to 7.5% for FY’25, with slight declines possible in FY’26.
Management Insight:-
Management noted that Q1 usually experiences weaker performance in the infrastructure sector due to seasonal factors. They anticipate a mild Q2 due to monsoon impacts but remain optimistic about the fiscal year, aiming to achieve performance levels comparable to FY’24.
Company profile:-
Ircon International Limited (IRCON) is a railway construction firm that has gradually developed since 1985 as an integrated engineering and construction, PSU specializing in big and technologically demanding infrastructure projects in a variety of areas, including trains and Highways.
Written by:- Abhishek Singh
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