RITES shares zoom 13% on revised estimates for 'major' LMG-BPB project

Shares of RITES Ltd surged as much as 13 per cent during the trading session Monday after the company announced it revised its estimates for a major order for Railway Electrification work for project -Lumding- Badarpur. The company informed about the same through an exchange filing on Friday.

RITES has received revised estimates for Railway Electrification work of LMG-BPB Section of Lumding Division, Northeast Frontier Railway, it said. The railway firm has received revised estimates for the ongoing project to Rs 531.77 crore, up from Rs 288.44 crore earlier, the filing added.

Following the announcement, shares of RITES Ltd rallied about 12.65 per cent on Monday, with the total market capitalization of the company standing closer to Rs 15,000 crore. The scrip had settled at Rs 275.20 in the previous trading session on Friday. Despite this rise, RITES is down 25 per cent from its 52-week high of Rs 413.08 hit in February 2024.

RITES had reported a 25 per cent fall in the net profit on a year-on-year (YoY) basis to Rs 82.5 crore in the September 2024 quarter. It had clocked a net profit of Rs 110.2 crore in the year ago period. The railway company's revenue for the quarter declined 7.1 per cent YoY to Rs 541 crore in Q2FY25 from Rs 582.4 crore in the same period last year.

Ebitda for the second quarter of the ongoing fiscal fell 23 per cent YoY to Rs 106.4 crore, while Ebitda margins for the reported quarter narrowed 390 basis points (bps) to 19.7 per cent for the reported quarter. RITES has declared its second interim dividend of financial year 2025 at Rs 1.75 per share, for which November 15 was fixed as record date.

IDBI Capital has maintained its hold rating on RITES following the Q2 show. "We will turn bullish on the stock once margins in Exports and Consultancy stabilize. As RITES highlighted, the consultancy segment is still seeing an increase in the contribution from non-IR projects within QA. The key stock catalysts are order inflow and the stabilization of consultancy margins, " it said.

Elara Capital, on the other hand, upgraded RITES to 'buy' from 'accumulate' following the recent correction. "A rebound in exports in FY26 with robust order inflows in line with guidance (make RITES a favorable play in infrastructure. We expect an earnings CAGR of 16 per cent through FY24-27E with an average ROE and ROCE of 20 per cent each in FY25E-27E," it said.

The management did not provide specific revenue guidance but indicated expectations for growth in EBITDA and PAT going forward, said Axis Securities. "Additionally, it signalled an increase in export orders in the future. However, due to higher competitive intensity, margin pressure is expected to persist," it added with an upgraded 'buy' rating and a target price of Rs 325.