RVNL shares hit 52-week high, up nearly 370% in a year; more steam left?

Shares of Rail Vikas Nigam Ltd (RVNL) rose sharply in Monday's trade to hit their one-year high level. The stock jumped 7.32 per cent to hit a 52-week high of Rs 146.65 against a previous close of Rs 136.65. The multibagger counter has gained around 111 per cent on a year-to-date (YTD) basis and 368 per cent in a year.

The company has recently established its solely-owned subsidiary company named 'Kinet Railway Solutions Ltd'. According to the Share Purchase Agreement signed, RVNL holds a 25 per cent stake, while joint stock company Metrowagonmash and Locomotive Electronic Systems possess 70 per cent and 5 per cent stakes, respectively.

Before this, the construction arm of Indian Railways received a letter of award (LOA) from the National Highways Authority of India (NHAI) worth Rs 808 crore. The LOA is for "rehabilitation and upgradation from 4 to 8 laning of Chandikhole – Paradip Section of NH-53 (Old NH – 5A) from Km. 60.000 to Km. 76.646 (Package-4) in Odisha on HAM mode – 2nd Call," RVNL stated. And, the project has to be completed in two years, it added.

On technical setup, support on the counter could be seen at Rs 132, followed by Rs 130, Rs 128 and Rs 120 levels.

Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, "RVNL has seen a magnificent move in the current financial year, soaring over 2x. Post such a stellar move, the stock underwent some correction/profit booking but maintained its bullish setup by sustaining above 21 DEMA. In the last couple of trading sessions, the stock again has started gaining traction and clocked new highs. As far as levels are concerned, Rs 130-120 is to be considered to be a strong support zone, while on the higher end, the stock looks well-versed to continue its northward march in the comparable period."

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock after a long time of consolidation has picked up with a strong bullish candle on the daily charts with decent volume participation to improve the bias to anticipate for further rise in the coming days. The next initial target lies near Rs 154 zone with further strength indicated. The near-term support is maintained near Rs 132 levels from here on and stay invested for further gains."

AR Ramachandran from Tips2trades said, "RVNL stock price looks bullish but overbought on the daily charts with next resistance at Rs 151.70. A daily close below support of Rs 128 could lead to Rs 106 in the near term."

Milan Sharma, Founder of 35North Ventures, said, "RVNL is one of the biggest beneficiary of spend on railways by the government. It has almost monopoly in the segment it operates. Financial consistency is seen quarter-on-quarter with good revenue CAGR of 22 per cent over last 5 years. EBITA has grown at the rate of 30 per cent over last 5 years, making it a good investment over the long term."

The stock was last seen trading higher than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 80.55. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 22.47 against a price-to-book (P/B) value of 4.63.

The scrip has an average target price of Rs 130, Trendlyne data showed, suggesting a potential downside of 9 per cent. It has a one-year beta of 0.67, indicating low volatility on the counter.

In addition, other railway stocks such as RailTel Corporation of India, Indian Railway Finance Corporation, IRCON International and engineering consultancy firm RITES jumped up to 4.55 per cent today. The upward move came after it was reported that Indian Railways may launch more non-AC general category trains between major cities to meet the demand of low-income passengers and migrant workers.

Meanwhile, Indian equity benchmarks traded lower in afternoon deals today amid weak global cues. The domestic indices were dragged by energy, consumer durables and metal stocks.

Also read: Stocks that share market analysts recommended on July 24, 2023: Infosys, Coforge, Tata Communications, ITC

Also read: Top News on July 24: Q1 results of IIFL Securities, Tata Steel, TVS Motor, Federal Bank; ex-dividend stocks today, share market and Nifty outlook, Realme C53 5G special sale on Flipkart