RVNL shares hit record high, stock zooms 62% in a month; is more steam left in this multibagger?

Rail Vikas Nigam Ltd (RVNL) shares on Thursday extended their upward run for the second consecutive session. The stock jumped 5.47 per cent to hit an all-time high of Rs 643.95. It eventually settled 3.19 per cent higher at Rs 630. At this price, it has gained 61.77 per cent in the past one month and delivered multibagger returns by rallying 245.87 in 2024 so far.

The rail PSU today said it received a letter of acceptance from Central Railway for "OHE modification work for up-gradation of existing 1 x 25 kV Electric Traction System to 2 x 25 kV AT Feeding System in Amla-Nagpur Section in Nagpur division to meet 3000 MT loading target." The contract is valued at Rs 138.45 crore. RVNL was declared the lowest bidder for this project last month.

The railway PSU has been securing new orders and signing meaningful pacts. Yesterday, it entered into an agreement with IMS Consultancy Pvt Ltd.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said RVNL shares have been rising due to a focus on railway infrastructure spending ahead of the Budget presentation on July 23.

"The stock has been a stellar performer in the past one year. Recent order wins, both domestically and overseas, have been keeping it in the limelight, given an increase in earnings visibility of the rail PSU. Those holding can continue with their positions. Long-term investors should buy this company on every dip," Bathini suggested.

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "RVNL is currently in a strong upward momentum, breaking into new territory and showing resilience against its stretched parameters. The stock has seen a remarkable increase this month, with no apparent signs of a slowdown. It is prudent to consider securing profits by setting a higher stop loss and capitalising on the momentum for as long as it endures."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 620 and resistance at Rs 644. A decisive close above Rs 644 level may trigger a further upside towards Rs 675. The expected trading range will be between Rs 600 and Rs 680 for the short term."

The counter traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 85.66. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 89.79 against a price-to-book (P/B) value of 16.70. Earnings per share (EPS) stood at 7.02 with a return on equity of 18.60.

RVNL is an executing arm of Indian Railways and works for and on behalf of the ministry to execute projects assigned to it. It works on a turnkey basis and undertakes the full cycle of project development from conceptualisation to commissioning including stages of design, preparation of estimates, calling and award of contracts, projects and contract management.

As of March 2024, the government held a 72.84 per cent stake in the rail PSU.