Rail Vikas Nigam Ltd (RVNL) gained almost 4.90% on Wednesday’s early trades to reach an intraday high of ₹ 78.10 apiece on the National Stock Exchange (NSE). Its shares were trading at ₹ 77.40 apiece at 12:15 PM.
According to an exchange filing, the company emerged as the L1 (lowest bidder) for two metro rail projects. The projects involve the supply, erection, testing, and commissioning of power supply receiving and distribution systems in two major cities – Surat & Ahmedabad.
The Surat Metro Phase I project has a cost of ₹ 673.8 crores and the Ahmedabad Metro Rail Project Phase – II has a cost of ₹ 384.3 crores.
RVNL has delivered multibagger returns of 152% in the past six months. Therefore, if an investor would have invested ₹ 1 lakh in the company’s shares six months ago, the value of their holdings would have been ₹ 2.52 lakhs today.
The metro rail project will be issued by the Gujarat Rail Corporation Ltd, which is yet to issue the letter of award (LOA). RVNL has participated in a consortium with Siemens India for the two projects, in which Siemens will be the lead partner having a 65% share, and the remaining 35% is owned by RVNL.
Rail Vikas Nigam Ltd is a Category-I Mini Ratna CPSE, under the Ministry of Railways. It undertakes project development & resource mobilization through the creation of project SPVs. They achieved a record turnover in FY-2021-22 of over ₹19,381 crores.
RVNL has a market cap of ₹ 15,523 crores and is a mid- cap stock. It has an ideal return on equity of 19.66% and an ideal debt-to-equity ratio of 0.91. Further, its shares are trading at a price-to-earnings ratio (P/E) of 11.49, which is slightly higher than the industry P/E of 9.01. This indicates that the stock might be overvalued as compared to its peers, or that investors are willing to pay a higher price for its future earnings.
Written by Karan N
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