This PSU stock delivered 180% returns in 9 months

Shares of state-owned Rail Vikas Nigam Ltd (RVNL) surged nearly 18 per cent in intraday trade to Rs 28.35 on the Bombay Stock Exchange on Tuesday amid spurt in volume trade. Massive expansion plans, strong earnings outlook along with the government's disinvestment bid have driven this stock to 178 per cent from its 52-week low of Rs 10.20 as on March 24, 2020. The stock hit its 52-week high of Rs 29.30 on January 30, 2020.  

Earlier today, RVNL share price opened tad lower at Rs 24 against the previous closing price of Rs 24.05 on the BSE. During the day's trade, the stock gained as much as 17.87 per cent in intraday trade to Rs 28.35, before settling at Rs 27.45, up 14.14 per cent. The market cap of the mid cap stock surged to Rs 5,723.38 crore.  Meanwhile, the BSE benchmark Sensex ended at 48,437, up 260 points or 0.54 per cent.     

On the volume front, there was surge in buying as 105.41 lakh shares changed hands over the counter as compared to two-week average volume of 11.70 shares on the BSE.    

The government is planning to offload up to 15 per cent stake in RVNL, and had in October invited bids from merchant bankers and legal firms for managing the share sale process. It currently holds 87.84 per cent stake in RVNL, an organisation associated with Indian Railways involved in building rail infrastructure required by the Railways.

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While Elara Capital and IDBI Capital Markets & Securities have bid for becoming the merchant banker for the government's stake sale in RVNL, Crawford Bayley & Company and SNG & Partners have applied for being the legal advisor for the planned offer for sale (OFS).

Recently, Pradeep Gaur, chairman and managing director of RVNL reportedly said that the company expects to post revenue growth of 30-40 percent in FY21. He expects the company to end the current fiscal with 20-25 percent growth in financial performance as compared to last year.

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Gaur claimed that the state-owned entity has exceeded pre-COVID levels and the value of projects that it will be executing will be almost 25-30 percent higher than last year and physical performance will be even more. The company's orderbook is estimated to be around Rs 75,000 crore, which comprises of doubling of the track and new railway lines.

Rail Vikas Nigam Ltd had posted a profit after tax of Rs 789.86 crore in FY20. As on March 31, 2020, it had a net worth of Rs 4,499.77 crore.