PSU railway stock jumps 10% and hits fresh 52-week high, what’s driving gains?

The shares of Rail Vikas Nigam Ltd. (RVNL) hit their fresh 52-week high of Rs 80.60 per share in the early hours of trading on Monday. The stock opened 10% above its previous close of Rs 73.30 and got locked in the upper circuit briefly. 

In the last 6 months, the railway stock has given its shareholders a multi-bagger return of 149%. Its one-month performance has been commendable as well. It generated over 98% gains in the previous month.

Rs 1,00,000 invested 6 months ago in RVNL would have become Rs 2,49,000. This would have resulted in multi-bagger gains of Rs 1,49,000 to the investors.

Formed in 2002, RVNL is a public sector undertaking under the Ministry of Railways. It is responsible for the implementation of infrastructure projects of the Railways Ministry in India. These projects can be the installation of railroad tracks, their upgrade/changes, railway electrification, building major bridges, and setting up workshops or production units.

This rise in stock price comes on the heels of back-to-back order wins from the company. Recently, RVNL emerged as a successful bidder for an international project in the Maldives for an estimated project cost of Rs 1,544.60 crore.

Before that, it was awarded Rs 137.55 crore contract under East Central Railway. Additionally, the PSU had secured two separate development contracts of cost Rs 484 crore and Rs 408 crore.

Earlier this year, the management had commented in the FY22 annual report that the company is taking strong measures towards controlling costs and timely project deliveries. The company also requested the government to allow it to leverage its equity base for raising additional funds.

Written By – Vikalp Mishra

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