The shares of this public-sector enterprise gained up to 1 percent after the company emerged as a higher bidder for EPC work worth USD 9,713,470.
With a market capitalization of Rs 14,069.68 crore, the shares of RITES Ltd were trading at Rs 293.50 per share, increasing around 0.39 percent as compared to the previous closing price of Rs 291.75 apiece.
Reason for Rise:-
Today the shares of the company have seen positive movement after RITES Ltd secured the top position as the H-1 bidder for the Design-Build-Finance project to upgrade the Palmyra to Moleson Creek Highway (Lots 1-3) from Guyana’s Ministry of Public Works. The total order value amounts to USD 9.71 million.
Financial Analysis:-
Examining the company’s financial performance, revenue plummeted by 11 percent from Rs 544 crore in Q1FY24 to Rs 486 crore in Q1FY25, and during the same time frame, net profit shrunk by 25 percent from Rs 120 crore and Rs 90 crore.
Key Challenges:-
The company experienced a drop in export revenue from ₹35 crores in Q1 FY24 to nearly nil in Q1 FY25, alongside a ₹25 crore decline in revenue from the Quality Assurance (QA) business with Indian Railways. These challenges led to a net impact of ₹60 crores.
Order Book:-
The order book increased by 11% from ₹31,000 crores on March 31 to ₹30,000 crores on June 30, with around ₹1,300 crores in new orders across several sectors, including rail infrastructure, highways, buildings, tunnels, and airports. In recent quarters, order intake increased significantly to ₹3,000 crores, up from ₹600 crores in the first half of the previous fiscal year.
Margin Guidance:-
The business expects consultant EBIT margins to steady at around 40%. Turnkey project margins are expected to range between 2% and 3%, varying on quarter and execution stage. Management predicts that margins will not return to former levels owing to increasing competition and different order acquisition techniques.
Despite obstacles from decreasing government CapEx growth, management remains confident about winning private orders. Despite a weak Q1 result, the company expects to improve sales and margins in the next quarters, signaling a potential comeback.
Export orders:-
The business received two big export orders: ₹900 crores for 200 coaches from Bangladesh and ₹300 crores for 10 locomotives from Mozambique. Revenue from these orders is expected to start in Q1 FY26, with plans to supply certain goods by the end of FY25.
Management guidance:-
Management emphasized a dual strategic focus on the rapid execution of the existing order book and aggressive bidding for new domestic and international orders. This approach aims to sustain the trend of securing approximately ₹3,000 crores in new orders each quarter.
Company Profile:-
RITES Limited provides a wide range of transportation infrastructure and related technology services, from idea to completion. It operates in four segments: consultancy services, leasing of railway rolling stock and equipment, and export of rolling stock, equipment, and others.
Written by:- Abhishek Singh
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