RITES stock in focus today on fresh contract win

Shares of RITES Ltd, a state-owned engineering firm, are in news today after the firm said it has received a Letter of Intent worth ₹28.5 crore from Gujarat Urban Development Company Limited (GUDC). This contract appoints RITES as the Third Party Inspection (TPI) agency for water supply systems, underground drainage, and sewage treatment plant projects under the AMRUT 2.0 and SJMMSVY schemes across urban local bodies in Gujarat. The project is to be executed in 60 months, marking a significant step in RITES' infrastructure development initiatives.

RITES stock closed 0.18% higher at Rs 275.85 on Tuesday against the previous close of Rs 275.35. Market capitalization of the company climbed to Rs 13,257 crore. RITES shares have a one-year beta of 1.41, indicating high volatility during the period. 

"We are pleased to inform you that RITES has received the Letter of Intent from Gujarat Urban Development Company Limited for “Appointment of TPI agency for WSS/UGD/STP projects under Amrut 2.0/SJMMSVY under GUDC for ULBs of Gujarat,” said RITES.  

This contract underscores RITES' commitment to enhancing urban infrastructure and its strategic role in the development of essential services.

Financially, RITES reported a 3.4% increase in net profit for the fourth quarter, amounting to ₹141 crore, although its revenue saw a 4.3% decline to ₹615 crore. The company's EBITDA rose by 5.4% to ₹185.5 crore, with margins expanding by 564 basis points to 30%. Additionally, a final dividend of ₹2.65 per share has been declared, pending shareholder approval at the upcoming annual general meeting. This financial resilience highlights RITES' ability to maintain profitability in a challenging market, demonstrating its robust financial management and strategic foresight.

The company's recent contract win and financial performance underscore its stable market position despite revenue challenges. This contract, alongside other projects such as the one in Guyana, illustrates RITES' robust project pipeline and strategic focus on international and domestic markets.

Stakeholders are keenly observing the outcomes of the upcoming shareholder meeting and its implications for RITES' future financial trajectory. The company's ability to secure significant contracts and maintain a stable share price is indicative of its strong market presence and operational efficiency.