Rail Vikas Nigam Ltd (RVNL) shares have continued to slide as the company reported Q2 results that missed analyst expectations. Following the report, Antique Broking analysts issued a bleak outlook for the stock, maintaining a “sell” rating and slashing the target price from ₹283 to ₹251. This new target suggests a potential 44% downside from the last close at ₹447.95.
Analyst Insights and Stock Performance
- Revenue Impact: RVNL’s Q2 revenue was flat at around ₹4,900 crore, falling short of estimates by 6%. The company cited monsoon season disruptions as a significant factor affecting revenue.
- Profit and Margin Pressures: EBITDA for the quarter declined by 9% year-on-year to ₹270 crore, missing estimates by 12%. A higher tax rate of 26% compared to 18% in the same quarter last year compounded the pressure, reducing profit after tax by 27% to ₹280 crore, 19% below expectations.
- Long-term Outlook: RVNL’s revenue and profit for the first half of FY25 have seen declines of 15% and 30%, respectively, with monsoon challenges and Union Election-related labor shortages impacting the company’s performance.
Growth Outlook and Valuation
- Future Projections: Analysts at Antique Broking noted that RVNL’s revenue growth, which was robust through FY22, has since tapered. They predict muted growth between FY23 and FY25, with expected new order wins likely only matching execution levels, leading to a stagnant order book.
- Valuation Concern: At an estimated 52 times FY27 earnings per share, Antique believes that RVNL’s current stock price already factors in any potential upside, leaving limited room for growth.
Key Financial Highlights
| Metric | Value |
|---|---|
| Current Price (11:20 AM) | ₹440.70 |
| Opening Price | ₹445.00 |
| Day’s High | ₹446.00 |
| Day’s Low | ₹429.20 |
| Market Cap | ₹91,970 crore |
| P/E Ratio | 68.28 |
| Dividend Yield | 0.48% |
| 52-week High | ₹647.00 |
| 52-week Low | ₹155.30 |
While RVNL’s MoUs present growth potential, Antique remains cautious about translating these into revenue. With stagnant order book projections and higher tax rates impacting profitability, RVNL faces a challenging outlook ahead.
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