Shares of Rail Vikas Nigam Ltd (RVNL) are off 12 per cent from their 52-week high of Rs 647, but are still up 213 per cent in 2024 so far and 358 per cent in the past one month. Brokerage StoxBox believes the recent stock correction is done with and a recovery is likely on the counter.
The RVNL stock has exhibited a significant increase, more than doubling in value since reaching a low point in May 2024, prior to experiencing a period of mild profit booking, said StoxBox. "Notably, drawdowns have been limited to 20 per cent, and the potential formation of the Harmonic ABCD pattern suggests the likelihood of a short-term recovery in the stock," it said.
RVNL's price action on August 12 also indicated initial signs of the dormant buyers now gradually getting active and attempting to garner strength from the sellers, which is a positive sign, said StoxBox.
On Thursday, RVNL shares were trading 1.3 per cent higher at Rs 571.10 on BSE. StoxBox said one can buy the RVNL stock for a short-term target of Rs 626, with a stop loss placed at Rs 538.
StoxBox said RVNL has expanded its global presence with new subsidiary in Uzbekistan and strategic MoU with Israel. In the June quarter, RVNL established a subsidiary, Rail Vikas Nigam LLC in Uzbekistan. Additionally, it signed a Memorandum of Understanding (MoU) with United Construction Limited of Israel to collaborate on projects across various sectors, including railways, MRTS, tunnels, highways and expressways, bridges, building works, airports, ports, irrigation, and power transmission and distribution, including solar and wind energy projects in Israel.
RVNL's Q1FY25 results were weak but StoxBox maintains positive outlook with strong order book and revenue guidance.
"In Q1FY25, RVNL reported weak performance with revenue declining 27 per cent YoY to Rs 1,026 crore and PAT falling 35 per cent YoY. The management attributed this decline to one-off factors and expects improved execution from 2QFY25, aiming to meet the FY25E revenue guidance of Rs. 22,000 crore. Despite a flat revenue outlook compared to FY24, RVNL’s strong order book of Rs 83,200 crore (4 times TTM revenue) provides strong visibility," StoxBox said.
The company has projected a revenue rebound in the remaining quarters of FY25, targeting Rs 17,700 crores over the next three quarters, reflecting an 8 per cent YoY increase.