Railway stock RITES up 8% today; key triggers, price targets post Q4 results

RITES Ltd, an engineering and consultancy services firm, saw its shares climbing 8 per cent in Friday's trade, as the railway PSU reported better-than-expected March quarter results, led by a beat on margins. 

B&K Securities said RITES' topline performance was muted but margins remained strong due to favourable mix and realisation of receivables. 

"While current headwinds in various business persist due to external factors, we believe the company has the requisite expertise and experience to navigate through the challenges," B&K Securities said.

Antique Stock Broking said its EPS estimates for FY26 and 27 have been revised upwards by 3 per cent and 6 per cent, respectively. It has also increased its margin estimates by 56-132 bps for FY26-FY27. The brokerage suggested its target price on RITES to Rs 259 against Rs 243 earlier. 

"The key stock catalysts are stability in consultancy margin and the commencement of export order execution, which make up for 15 per cent of the order book," it said.

RITES maintained its guidance of 20 per cent growth in revenue and 10 per cent growth in PAT, with expected Ebitda margin of 20 per cent and PAT margin of 15-16 per cent. It aims to achieve the highest-over revenue in FY26 and reach order book of Rs 10,000 crore by end of FY26. Th railway PSU said it may continue to book one export order each quarter, adding that the execution of locomotives/coach order from Mozambique/Bangladesh will likely start from FY26 onwards.

"The company is targeting international markets in Africa, Southeast Asia, Latin America, and the Middle East for consultancy and export orders. We have a positive outlook on the stock," said Arihant Capital Markets.

B&K Securities finds RITES as the best proxy to play the strong traction in Railways and Infrastructure capex. It suggested 'Buy' but a revised target price of Rs 289 on the stock against Rs 301 earlier.

RITES is a multi-disciplinary engineering and consultancy organization providing a range of services from concept to commissioning in all facets of infrastructure. It has signed multiple MoUs with agencies in India and abroad but materialisation in terms of actual orders are
awaited. 

"Being a service company, it has moderate capex, negative working capital and RoE at 18 per cent (FY27E)," Antique Stock Broking said.