RVNL shares hit record high of ₹495; what's behind its 40% rise in one month?

State-owned Rail Vikas Nigam Limited (RVNL) is one of the multibagger stocks that have delivered a whopping return to their shareholders in the last one year, thanks to its strong order book, robust financial performance, and positive outlook for railway sector amid the government's strong commitment to invest in railway infrastructure. What is even more astonishing is that the railway stock has delivered consistent returns throughout the year - 295% in 12 months; 165% in six months; 75% in 3 months; and 168% year-to-date.

In the last one month, RVNL shares have risen 40% from around ₹353 to ₹495 mark and touched multiple record high levels, after it bagged 9 orders worth ₹1,898 crore. In comparison, the BSE benchmark Sensex and BSE capital goods index rallied 11% and 16%, respectively, during the same period.

On Friday, RVNL shares opened higher for the third straight session and rallied as much as 18.2% to hit a fresh all-time high of ₹495, while the market capitalisation crossed 1 lakh crore for the first time to ₹1.01 lakh crore. The counter has reported a growth of 320% against its 52-week low of ₹117.35 hit on July 13, 2023.

In an exchange filing last evening, RVNL said that it has signed a deal with Delhi Metro Rail Corporation Limited (DMRC) for participation in the upcoming projects in India and abroad. It will act as project service provider for metro, railways, high speed rail, highways, megabridges, tunnels, institutional buildings, workshops or depots, and railway electrification. Earlier this, week, the railway PSU said that it has incorporated a subsidiary company named RVNL Middle East Contracting LLC in Dubai, UAE.

As of March 31, 2024, the order book stood at ₹85,000 crore. In FY23-24, it completed 12 projects and the cumulative completed projects stood at 152 at the end of the March quarter of FY24.

For the full financial year FY24, RVNL, which comes under the Ministry of Railways, posted record high top line and bottom line. The revenue grew 7.15% to ₹21,889 crore, while profit grew 17.94% to ₹1,575 crore as compared to the previous fiscal.

The management in the earnings call said, “We want to grow the top line at a rate of around 5% to 7%. And to grow like this, all the time we want to maintain an order book of around ₹75,000 crore to ₹1 lakh crore. ₹1 lakh crore is an aspirational target."

The board of the company has also declared a final dividend of ₹2.11 per share (i.e. 21.10%) for the financial year 2023-24, subject to shareholders’ approval. At the current share price, RVNL's dividend yield stands at 0.08%.