Shares of Rail Vikas Nigam Ltd (RVNL) are among the top performing railways stocks in 2024. RVNL stock has gained 162% this year and risen 186% in a year. The stock has risen 236% from its 52-week low of Rs 142.10 reached on October 26, last year, delivering multibagger returns during the period. However, a flip side of the rally is that the stock has become expensive in terms of valuations.
The stock has a high PE ratio of 68.37, compared to the sector PE of 42.14. Its price to earnings growth (PEG) ratio stands at 5.95. which indicates the stock is overvalued.
A PEG ratio above 1 indicates that the stock is overvalued and below 1 shows that the stock is undervalued. PEG ratio takes into account the expected earnings growth not just current earnings. In case of PE ratio, past earnings are taken into account for the calculations of the ratio.
In the current session, the RVNL stock snapped three days of gaining streak. The stock slipped 3.83% intra day on Friday to Rs 470.50 on BSE. The multibagger stock is down 26% from its record high of Rs 647 reached on October 26, 2023. Total 2.16 lakh shares of RVNL changed hands amounting to a turnover of Rs 10.31 crore. Market cap of RVNL slipped below Rs 1 lakh crore to Rs 99,518 crore on BSE. RVNL shares have a one-year beta of 1.4, indicating high volatility during the period.
In terms of technicals, the relative strength index (RSI) of RVNL stands at 42.9, signaling it's trading neither in the overbought nor in the oversold zone. Rail Vikas Nigam shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day and 100 day but higher than the 150 day and 200 day moving averages.
Analysts have mixed views on the prospects of the stock.
Kushal Gandhi, Technical Analyst at StoxBox said, "The price of RVNL has declined by 26% from its all-time high of 647. Recently, the corrective rally has found immediate support near the former demand zone around the 425 levels, resulting in a sharp and sustainable technical rebound. However, the price action is currently hindered by significant overhead resistance at the 100-day and shorter-term moving averages, along with a previous gap-down area, which limits potential upside. The relative strength has begun to reverse from oversold conditions; however, it remains below median levels, indicating a need for further bullish momentum. A continued upside is expected, contingent upon decisively reclaiming the immediate supply zone between 525 and 509. Therefore, we recommend refraining from purchasing the stock at lower valuations and instead waiting for more favorable buying opportunities."
Abhijeet Ramachandran, independent Sebi registered analyst said, "RVNL stock price is slightly bullish on the Daily charts with strong support at 479.6. A Daily close above resistance of 520 could lead to a target of 578 in the near term."
Gaurav Bissa, VP, InCred Equities is bullish on the prospects of the stock.
"RVNL has been in formation of higher highs and higher lows since 2022 which is a characteristic of a strong uptrend. It has also been trading in a strong rising channel pattern on the daily as well as weekly charts with most recent bounce seen from lower band of the channel support around 425 levels. Additionally, it has been respecting its 200EMA on the daily charts and has bounced towards life high on every occasion it retested the moving average. While it corrected about 26 percent from its top and has been underperforming the broader market indices, it is also proving a lucrative opportunity for the long term investors. It is expected to attempt a fresh life high in the coming quarters. Investors are advised to add RVNL at current levels and on dips around Rs 420 levels for a move towards fresh life high levels," said Bissa.
Jigar S Patel, senior manager at Anand Rathi said, "Support will be Rs 480 and resistance at Rs 515. A decisive move above the Rs 515 level may trigger a further upside of Rs 535. The expected trading range will be between Rs 465 and Rs 545 for the short-term."
RVNL is an executing arm of Indian Railways and works for and on behalf of the ministry for projects assigned to it for execution. It works on a turnkey basis and undertakes the full cycle of project development from conceptualisation to commissioning including stages of design, preparation of estimates, calling and award of contracts, project and contract management.