One of the Navratna PSU stocks, a leading player in India’s transport consultancy and engineering sector, has skyrocketed at an intraday high of 12.65 percent on a revised total contract value of Rs. 531.77 crores for the project “Lumding-Badarpur.” 

Stock movement: 

With a market capitalization of Rs. 14,216.26 crores, the shares of Rites Limited were intraday high at Rs. 310 per equity share, rising nearly around 12.65 percent from its previous day’s close price of Rs. 275.20. Since then, the share has retreated and is now trading at Rs. 293.90. 

What happened: 

Rites Limited has received revised estimates for the railway electrification work of the LMG-BPB section in the Lumding Division of Northeast Frontier Railway for the project “Lumding-Badarpur.” 

The contract for the railway electrification work is ongoing, with a revised total cost of Rs. 531.77 crore (excluding GST, including PMC fee) from the original cost of Rs. 288.44 crore. 

Order book: 

Rites Limited demonstrates robust business performance with a substantial order book of Rs. 6,581 crore as of September 2024. The company’s diversified portfolio includes exports (Rs. 4,240 crore), consultancy (Rs. 2,542 crore), turnkey projects (Rs. 2,506 crore), REMC Ltd. (Rs. 120 crore), and leasing services (Rs. 173 crore). 

During Q2FY25, Rites Limited secured new projects worth Rs. 729 crore, with consultancy services and Turkey projects leading at Rs. 327 crore each. The company’s competitive edge is evident in its order acquisition strategy, with 63% of orders won through competition, and 37% of orders through nomination, showcasing its strong market position and technical expertise. 

Major Projects Secured in Q2 FY25: 

Rites Limited has secured an impressive portfolio of 91 projects worth Rs. 729 crore during Q2 FY25, spanning diverse sectors and geographies. Most projects have completion timelines between 2025 and 2027, ensuring steady revenue visibility for the coming years. 

The standout project is the construction of a medical college/hospital in Amravati valued at Rs. 320 crores, while significant consultancy projects include railway operation & maintenance services for Dhamra Port (Rs. 100 crores) and TPM & QC services for 47 roads in Assam (Rs. 43 crores).

The company’s export segment shows promise with a Rs. 36 crore locomotive supply contract for Tsiko Africa Logistics, while the leasing division continues to grow through multiple locomotive leasing agreements with GSECL and NSPCL. 

Recent quarter results and ratios: 

Rites Limited’s revenue has decreased from Rs. 153 crore in Q2 FY24 to Rs. 541 crore in Q2 FY25, which is down by 7.04 percent YOY. The net profit of Rites Limited has also been down by 25.45 percent, from Rs. 110 crore in Q2 FY24 to Rs. 82 crore in Q2 FY25. 

Rites Limited’s revenue and net profit have grown at a CAGR of 8.79 percent and 3.69 percent, respectively, over the last three years. 

In terms of return ratios, the company’s ROCE and ROE should be 25.4 percent and 17.5 percent, respectively. Rites Limited’s almost debt-free company and EPS is to be Rs. 166. 

Company Overview: 

RITES Limited was formerly known as Rail India Technical and Economic Service Limited and is a prominent Indian public sector undertaking established in 1974. The company specializes in engineering consultancy and project management services primarily in the transport infrastructure sector. 

Written By – Nikhil Naik 

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