Sell RVNL shares & hold IRCON, says Antique; why it see up to 46% fall in railway stocks

Brokerage firm Antique Stock Broking is not very positive on select railway stocks. Infact, the broker sees up to 46 per cent downside risks in the share price of Rail Vikas Nigam Ltd (RVNL) and IRCON International, post a mixed set of numbers in the March 2025 quarter.

RVNL reported a net profit of Rs 478.4 crore, down 4 per cent on a year-on-year (YoY) basis. The railway company reported a 4 per cent YoY fall in the net profit at Rs 6,426.9 crore. Ebitda for the quarter fell 5 per cent YoY to Rs 432.9 crore, with an Ebitda margin contracting marginally to 6.7 per cent for the quarter. It also announced a final dividend of Rs 1.72 per share for FY25.

Rail Vikas Nigam reported a weak 4QFY25, below estimates. Execution was impacted by delayed fund release from the Ministry of Railways, which RVNL expects would normalize, and has guided for a 10–11 per cent revenue increase in FY26E. The FY25 order book stands at Rs 97,000 crore, evenly split between nomination and competitive bids, of which Rs 14,000 crore bn are fresh inflows and Rs 18,000 crore arising from scope change in new orders, said Antique Stock Broking.

For FY26E, RVNL has guided for Rs 17,000–18,000 crore in inflows. We cut FY26E/ 27E EPS estimates by 8 per cent/ 11 per cent but keep our SoTP-based target price largely unchanged at INR 216. As we have factored in FY25 balance sheet related changes. to cash and investments," it added with a 'sell' rating with a target price of Rs 216, citing to expensive valuation. "Stronger execution and higher-than-expected order wins are the key upside risks."

On the other hand, IRCON International reported 15 per cent YoY fall in its consolidated net profit at Rs 211 crore, while its revenue declined 10 per cent YoY to Rs 3,412 crore in the March 2024 quarter. Its Ebitda dropped 21.1 per cent YoY to Rs 261.4 crore, while margins narrowed to 7.7 per cent for the quarter.

Ircon International reported a 24 per cent YoY decline in Q4FY25 PAT, impacted by losses/ provisions related to EPC work on the Chennai Metro; however, adjusted PAT was in line with expectations. With an order book of Rs 20,300 crore, it expects to maintain a similar revenue trajectory in FY26E and is focused on rebuilding its order book, which has been relatively weak, said Antique.

"Q4FY25 saw a marginal improvement in order inflow at Rs 1,40 crore. For FY26E, IRCON is targeting new opportunities in areas such as Kavach, signal diagnostics systems, the hydropower sector, and has actively participated in metro and electrical project tenders. We have raised the valuation multiple for the EPC business to 30 time, reflecting confidence in the new CMD’s growth strategy. We maintain a 'hold' rating with a revised target price of Rs 180," the brokerage noted.

Shares of IRCON International settled at Rs 183.60 on Friday, falling nearly a per cent, with a total market capitalization more than 17,250 crore. The stock is just shy-off Antique's target price. RVNL dropped nearly 2 per cent to close at Rs 398, with a total mcap below Rs 83,000 crore. Antique's target of Rs 216 suggests a 48 per cent crash in the counter.