Shares of Rail Vikas Nigam Ltd (RVNL) and IRCON International Ltd are among the most sought after shares in the railway sector apart from the state-owned Indian Railway Catering and Tourism Corporation (IRCTC). While IRCON International is an engineering and construction company with specialisation in transport and construction infrastructure for railways, RVNL is an executing arm of Indian Railways and works for and on behalf of the ministry for projects assigned to it for execution.
The shares of both RVNL and IRCON International are in an uptrend for the last one year.
While RVNL shares have zoomed 310% in a year, stock of IRCON International has risen 137% in the last one year. In fact, the RVNL stock has turned into a multibagger surging 284% and 546% in two years and three years, respectively.
The two railway scrips have been rising in 2023 too.
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While RVNL shares have zoomed 80% this year, stock of IRCON International has risen 42% during the period.
Of late too, the two shares have been in a major uptrend. While RVNL stock has gained 88%, shares of IRCON International have risen 56% in the last three months.
On Thursday, RVNL shares opened lower at Rs 123.15 against the previous close of Rs 123.85 on BSE. Later, the stock ended 0.32% lower to Rs 123.45 on BSE. Total 13.05 lakh shares of the firm changed hands amounting to a turnover of Rs 16.08 crore. Market cap of RVNL rose to Rs 25,739.57crore on BSE. The stock hit a record high of Rs 144.50 on May 8, 2023 and a 52-week low of Rs 29.65 on June 22, 2022.
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In terms of technicals, the relative strength index (RSI) of RVNL stands at 56.9, signaling it's trading neither in the overbought nor in the oversold zone. RVNL stock has a one-year beta of 0.7, indicating low volatility during the period. Rail Vikas Nigam stock is trading higher than the 20 day, 50 day, 100 day and 200 day moving averages but lower than the 5 day and 10 day moving averages.
On the other hand, shares of IRCON International ended 1.20% lower at Rs 84.69 on Thursday.
The stock hit a record high of Rs 91.70 on June 21, 2023.
Total 4.36 lakh shares of the firm changed hands amounting to a turnover of Rs 3.70 crore on BSE. Market cap of the firm stood at Rs 7965.23 crore.
In terms of technicals, the relative strength index (RSI) of IRCON International stands at 56.4 signaling it's trading neither in the overbought nor in the oversold zone. IRCON International stock has a one-year beta of 1.1, indicating high volatility during the period.
Here‘s a look at what analysts said on the outlook of both stocks and which among them can fetch better returns in the long term.
Abhijeet from Tips2trades said, “Fundamentally, IRCON International looks a much better stock with lower debt-equity ratio and steady profit growth. Technically, Rs 90 is a very strong resistance on the daily charts. A close above this level could lead to target of Rs 98 in the near term. Support will be at Rs 81.7."
Gaurav Bissa, VP, InCred Equities said, "The structure of Ircon and RVNL is quite identical. RVNL had witnessed a major breakout from ascending channel pattern on the weekly charts whereas Ircon witnessed a breakout from ascending wedge pattern on the weekly charts. Both the stocks witnessed strong volumes at the time of breakout. However, a major difference between the two is RVNL is trading near support area whereas Ircon is considerably above its major support area. RVNL and Ircon are also forming bullish flat patterns on the daily charts which is a continuation pattern in nature and can push the stocks higher once a breakout is confirmed. The target for RVNL comes around 185 whereas for Ircon it comes around 120 in the long term."
Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "Both the stocks IRCON and RVNL are well placed and after a consolidation phase for quite some time has scope for much upside potential in the coming days.
IRCON
The stock has witnessed resistance near Rs 89 zone and has maintained the positive trend intact with near term support visible near Rs 81 levels has indicated a bullish pennant type chart pattern on the daily chart where further a decisive move past the Rs 89 zone would trigger for fresh further upward move for next targets of Rs 100 and Rs 127 levels.
RVNL
The stock has slipped after the decent rally taking support near Rs 111 zone and indicated a gradual rise thereafter to improve the bias and sentiment with further upside move visible till Rs 145 zone which is the previous peak level achieved. A decisive breach above the previous peak would trigger for fresh breakout and can anticipate for next targets of Rs 182 and Rs 198 levels in the coming days. At current levels, the support would be near Rs 112 zone, which can be kept as a stop loss."
Aamar Deo Singh, Head Advisory, Angel One said, “Since the beginning of the year, Rail Vikas Nigam Ltd. (RVNL) stock has increased by over 80%, outperforming Ircon International, which has increased by over 40%. Investors are recommended to consider booking partial profits at the current level as the upside potential for the equities appears to have been reached in the short-term.”
V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT) said, “IRCON International Ltd is small cap company in construction & engineering. India is growing and there is huge scope in infrastructure sectors. On a year on year basis, IRCON has delivered 138% return and in this quarter, almost 65% gains have been generated. On June 21, it hit an all-time high of Rs 91.70 and as of now trading at 84. As of now, the stock is facing resistance from previous month high point. Rs 81.20 is immediate support for price and if gets a breakdown, then there is high a possibility that price could tank till Rs 80 to Rs 74 range. This could be considered as a “dip buying” in it. Stop loss should be fixed at Rs 65 and target expectancy in near term should be 93/95/98/100. So, either wait for Buying on Dip or wait for this Breakout sustain above Rs 88.50. In both cases, targets and stop loss levels will remain same.
On which stock can deliver better returns in the future, Ambala said, “I can see potential in both stocks as they are linked to core businesses. When it comes to valuation IRCON’s PE ratio is around 10.50 compared to its sectoral PE which is at 40.50. Its Beta is around 1.03 which indicated high volatility It had delivered high dividend as compared to its sectors dividend yield. On the other hand, RVNL’s PE ratio is 18.17 compared to its sectoral ratio which is 15.29. So it’s at a little higher side because it has monopoly in its business. Dividend yield is 1.72 of RVNL and that of sector is 1.14%. Both stocks are fundamentally strong and stable. So, it is a good bet to invest in the long term.”
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