Rail Vikas Nigam Ltd EBITDA up 24.35% YoY boosted by higher operating leverage
Company Overview:
Rail Vikas Nigam Ltd (RVNL), established in 2003 by the Government of India, operates as a prominent player in the realm of rail infrastructure development. The company is entrusted with the implementation of diverse rail projects, encompassing tasks such as doubling, gauge conversion, new line construction, railway electrification, significant bridge construction, establishment of workshops and production units, and the sharing of freight revenue as per concession agreements with the Ministry of Railways (MoR). Furthermore, RVNL has made strategic inroads into various infrastructure segments, including the metro and highways sectors, through competitive bidding processes.
Clientele and Expansion:
RVNL’s principal client is the Indian Railways, underscored by an expanding client portfolio encompassing central and state government ministries, departments, and public sector undertakings. With a commitment to growth and diversification, RVNL’s engagement now spans beyond railways, as evidenced by its participation in the metro, highway, and other infrastructure domains. Such endeavors are characterized by the company’s competitive pursuit of opportunities and successful bid wins, propelling its expansion into broader sectors.
New project and order book:
As of June 30, 2023, RVNL’s financial landscape demonstrates notable achievements and promising prospects. The company’s robust order book, valued at over Rs. 65,000 crores, serves as a testament to its operational prowess and growth trajectory. Notably, RVNL maintains a forward-looking perspective, aiming to further enhance its order book to a range of Rs. 75,000 crores to Rs.1 lakh crores. A significant catalyst for this optimism lies in the company’s impressive track record of securing railway tendering opportunities, marked by successful bids totaling more than Rs. 30,000 crores.
Valuation and return ratios:
The company is currently trading at a price-to-earnings (P/E) ratio of 18.6, while the industry average P/E ratio stands higher at 30.6. This suggests that the company’s stock price is relatively lower in relation to its earnings compared to its industry peers. company reports a healthy return ratio, return on equity stands at 20.7% where return on capital employed (ROCE) is at 17.8%. Return on assets stands at 7.42% as of 30 June 2023. The company reports a healthy interest coverage ratio standing at 4.35. Debt to equity stands at 0.88.
Financial Results – Q1FY24:Consolidated
The revenue breakup for Q1FY24 includes Rs. 838 crores from metro projects and Rs. 3,941 crores from non-metro projects. The financial results for the first quarter of the fiscal year 2023-24 reflect RVNL’s steadfast performance. The company recorded a remarkable 20.06% Year-on-Year (YoY) growth in revenue, amounting to Rs. 5,571 crores, attributing this achievement to a robust and well-structured order book. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) demonstrated a notable YoY surge of 24.35%, reaching Rs. 349 crores, while EBITDA margins remained consistent at 6.27%, aligned with the preceding quarter’s figures.
Further analysis of the financials reveals a 25.05% YoY increase in Earnings Before Interest and Taxes (EBIT), totaling Rs. 343 crores. This growth is attributed in part to a reduction in depreciation costs by 7.72%, alongside consistent EBIT margins of 6.17%, mirroring the previous quarter’s performance.
RVNL’s net profit exhibited a strong upward trajectory, registering a YoY surge of 15.26%, culminating in Rs. 343 crores. Notably, the company’s diligent management of operating expenses and associated costs contributed to this positive outcome. Additionally, the Earnings Per Share (EPS) for the quarter amounted to Rs. 1.65, signifying a commendable 15% YoY growth.
conclusion:
RVNL’s financial results for Q1FY24 underscore the company’s operational resilience and strategic acumen, positioning it for continued growth and value creation. The consistent pursuit of railway tendering opportunities, coupled with a robust order book, augurs well for its sustained positive trajectory across diverse infrastructure sectors.
