RVNL shares in focus as railway PSU gets LoA for Rs 555 cr Andhra Pradesh project

Shares of Rail Vikas Nigam Ltd (RVNL) are in focus on Thursday after the railway PSU said it has bagged a Letter of Acceptance (LoA) from National Highway Authority of India (MHAI) for construction of 6 lane access controlled connectivity in the State of Andhra Pradesh under the hybrid annuity model.

The project cost is Rs 554.64 crore and the order is to be executed within 730 days, RVNL said. The order is for construction of 6 lane access controlled connectivity to Visakhapatnam Port Road from Sabbavaram bypass of Anakapalli - Anandapuram corridor to Sheelanagar junction of NH 5 1 6C. RVNL had informed stock exchanges that it had emerged as the Lowest Bidder (L1) for the same project on March 11.

Also this month, the company received LoA from South Western Railway for engineering, procurement and construction (EPC) for design, supply, erection, testing and commissioning of 2X25 KV OHE & PSI system (TSSs & SPs & SSPs) including electrical general devices, engineering & telecommunication works.

RVNL's order inflow (LOA + L1) for the first three quarters of FY25 stood at Rs 25,000 crore. Its order book stood at Rs 97,000 crore at the end of December quarter, which was 4.8 times its trailing 12-month revenue.

The order book comprised mainly of nomination orders (49 per cent) and the remaining 51 per cent work was secured from bidding. Competitive orders were from the railways, irrigation, power, metro, etc. A total of Rs 4500 crore worth of orders were from the international market at the end of December quarter.

"Despite a good order book, execution is expected to stay muted as projects are still in initial phase of construction (seeking approvals). RVNL has guided for flattish revenue on YoY basis in FY25E and FY26E," Antique Stock Broking said on February 20. It cut its EPS estimates for RVNL by 3-7 per cent over FY25-27E.

"We retain SELL rating on the stock with a revised SoTP based target of Rs 215 (earlier Rs 251) due to expensive valuation; the stock trades at 47 times FY27E EPS. We value its EPC business at 35 times FY27E EPS (earlier 38 times) and investment and cash are valued at book value," Antique Stock Broking said last month.