Introduction:
Rail Vikas Nigam Limited (RVNL), a pivotal player in India’s railway infrastructure, has demonstrated remarkable growth, with a Compound Annual Growth Rate (CAGR) of 100% in its stock over the past three years. This exceptional performance aligns with the Indian government’s robust focus on enhancing railway infrastructure. India boasts the fourth-largest railway network globally, a vital backbone to its transportation and logistics.
The Government's Push for Railways:
The Indian government's growing emphasis on infrastructure development is visible in the budget allocations for the railway sector. In the 2024 interim budget, the railway sector was allocated ₹2.55 lakh crore for 2024-25. Notably, plans to modernize 40,000 conventional rail bogies to Vande Bharat standards and initiatives like the PM-GatiShakti Cargo Terminals aim to strengthen multimodal logistics in the coming years.
Company Overview:
Established in 2003, RVNL serves as the Ministry of Railways’ (MoR) execution arm, responsible for delivering key infrastructure projects. Although primarily focused on railways, RVNL has diversified into other infrastructure domains, including metro projects, tunnels, and monumental bridges. Its footprint extends to over 24 locations and 30 operational Project Implementation Units (PIUs), signifying its national importance.
RVNL’s asset-light, turnkey project model allows it to execute high-value projects from concept to commissioning efficiently. Over the years, it has commissioned significant projects, including the 1,000 km milestone for new railway lines, doubling projects, and gauge conversions.
Financial Performance:
RVNL's financial performance underscores its strong market position. For FY2023, the company reported revenue of ₹20,282 crore, a 4.6% increase over FY2022. The net profit surged by 28%, reaching ₹1,421 crore compared to ₹1,110 crore in the previous year. Over a four-year span (FY2020–FY2023), RVNL achieved a CAGR of 12% in revenue and 23% in net profit.
Key Financial Metrics:
| Indicator |
CAGR 3 Yrs |
CAGR 5 Yrs |
TTM |
Mar '24 |
Mar '23 |
Mar '22 |
Mar '21 |
Mar '20 |
| Total Revenue |
13.4% |
17.3% |
21514.9 |
22915.1 |
21285.5 |
20191 |
15730.4 |
14796.2 |
| Operating Expenses |
12% |
16.4% |
19176.1 |
20386.4 |
19037.5 |
18200.3 |
14523.5 |
13744 |
| Operating Profit |
15.2% |
20.4% |
1174.5 |
1346.2 |
1244.1 |
1181.5 |
880.1 |
786.5 |
| Operating Profit Margin % |
1.6% |
2.7% |
|
5.87% |
5.84% |
5.85% |
5.60% |
5.32% |
| Total Expenses |
12.9% |
17% |
|
20975.7 |
19641.1 |
18784.9 |
14574.7 |
13805.3 |
| EBIDT |
28% |
25.8% |
|
2528.7 |
2248 |
1990.7 |
1206.9 |
1052.1 |
| Interest |
171.8% |
61.3% |
559.8 |
568.5 |
581.4 |
563.7 |
28.3 |
41 |
| Depreciation |
-3.2% |
29.6% |
22.2 |
20.8 |
22.3 |
20.9 |
22.9 |
20.3 |
| Profit Before Tax |
18.8% |
20.7% |
1756.8 |
1939.4 |
1644.4 |
1406.1 |
1155.7 |
990.8 |
| Tax |
30.4% |
25.7% |
409.6 |
476.5 |
376.4 |
318.9 |
215.1 |
201 |
| PAT Before ExtraOrdinary Items |
15.9% |
19.3% |
|
1463 |
1268 |
1087.2 |
940.6 |
789.9 |
| Net Profit |
15.9% |
19.3% |
1347.2 |
1463 |
1268 |
1087.2 |
940.6 |
789.9 |
| Net Profit Margin % |
3.3% |
2.3% |
|
6.73% |
6.25% |
5.60% |
6.10% |
5.43% |
| EPS |
15.9% |
19.3% |
|
7 |
6.1 |
5.2 |
4.5 |
3.8 |
Peer Comparison:
| Stock |
Current Price |
PE TTM Price to Earnings |
Market Capitalization |
Dividend yield 1yr % |
Net Profit Qtr |
Net Profit Annual YoY Growth % |
Operating Revenue Qtr |
Revenue Growth Qtr YoY % |
Price to Book Value |
| Rail Vikas Nigam Ltd. |
477.3 |
68.38 |
99518.01 |
0.44% |
223.93 |
10.82% |
4073.8 |
-26.88% |
11.38 |
| Larsen & Toubro Ltd |
3577.8 |
37.68 |
503085.19 |
0.78% |
2785.72 |
24.72% |
55119.82 |
15.12% |
4.91 |
| GMR Airports Infrastructure |
85.76 |
-134.93 |
90553.78 |
0.00% |
-141.65 |
-211.99% |
2402.2 |
18.06% |
-104.13 |
| NBCC (India) Ltd. |
107.97 |
67.63 |
29151.9 |
0.39% |
104.62 |
50.58% |
2144.16 |
11.80% |
12.08 |
| Kalpataru Projects |
1294.65 |
43.1 |
21031.1 |
0.62% |
93 |
15.62% |
4587 |
8.16% |
4.11 |
| Ircon International |
221.74 |
21.58 |
20855 |
1.40% |
224.02 |
21.48% |
2287.13 |
-15.83% |
3.53 |
| NCC Ltd. |
310.9 |
26.13 |
19519.75 |
0.71% |
209.92 |
16.66% |
5527.98 |
26.20% |
2.87 |
Shareholding Pattern :
| in % |
Jun'22 |
Sep'22 |
Dec'22 |
Mar'23 |
Jun'23 |
Sep'23 |
Dec'23 |
Mar'24 |
Jun'24 |
Sep'24 |
| Promoter |
78.2 |
78.2 |
78.2 |
78.2 |
78.2 |
72.84 |
72.84 |
72.84 |
72.84 |
72.84 |
| Public Shareholding |
21.8 |
21.8 |
21.8 |
21.8 |
21.8 |
27.16 |
27.16 |
27.16 |
27.16 |
27.16 |
| Institutions |
9.24 |
9.19 |
8.9 |
8.04 |
7.51 |
8.15 |
8.67 |
8.5 |
9.9 |
11.38 |
| Non-Institutions |
12.56 |
12.61 |
12.91 |
13.76 |
14.29 |
19.02 |
18.49 |
18.66 |
17.26 |
15.79 |
Order Book and Execution:
RVNL’s order book has grown significantly, with ₹65,000 crore worth of orders by Q3 FY2024. The company’s recent focus on non-railway sectors, including international projects, is aimed at reducing dependence on Indian Railways, diversifying its revenue streams.
SWOT Analysis:
| Strengths |
Weaknesses |
| Government Backing: Strong government support ensures steady project flow and financial security. |
Dependence on Indian Railways: Reliance on government contracts makes RVNL vulnerable to policy and budget changes. |
| Asset-Light Model: Minimal capital investment allows for operational efficiency and cost control. |
Project Delays: Infrastructure projects like the Kolkata Metro face delays due to land acquisition and clearances. |
| Turnkey Expertise: Comprehensive project execution from planning to completion builds credibility. |
Limited Private Sector Participation: Focus on public contracts limits exposure to private sector opportunities. |
| Infrastructure Expertise: Expertise in rail electrification, signaling, and metros positions RVNL as a leader. |
|
| Opportunities |
Threats |
| Global Expansion: Increasing involvement in international projects could diversify revenue sources. |
Budget Cuts and Policy Changes: Any reduction in government funding or policy changes could disrupt revenue. |
| Public-Private Partnerships (PPP): Opportunities in PPP models for station development can open new business avenues. |
Increased Competition: Rising competition from other PSUs and private players can challenge market share. |
| Infrastructure Push: Government focus on infrastructure provides growth potential, especially in multimodal logistics. |
Execution and Regulatory Risks: Delays due to land acquisition, regulatory approvals, or cost overruns can impact profitability. |
| Technological Advancements: Rising demand for high-tech railway solutions like electrified networks offers new opportunities. |
|
Conclusion:
RVNL’s historical growth, backed by government initiatives, solidifies its position as a major player in the railway infrastructure sector. With its growing order book and expansion into non-railway infrastructure, the company appears poised for sustained growth. However, its future success will depend on diversifying revenue streams and mitigating reliance on Indian Railways. Investors should keep an eye on its execution capabilities, international ventures, and evolving government policies.
Discalimer!
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