RITES Ltd, a government-owned transport infrastructure consultancy firm, saw its stock price surge by nearly 7% in early trade after it announced a Memorandum of Understanding (MoU) with the Central Water and Power Research Station (CWPRS).
This strategic agreement, focused on engineering consultancy and research in water resources, has sparked investor interest despite the company reporting a 15.7% YoY revenue decline in Q3FY25.
So, is this a turnaround moment for the stock, or just a short-lived rally? Let’s break it down.
Also read: RITES Stock Plunges 37% from 52-Week High
What does the MoU mean for RITES?
The MoU between RITES Ltd and CWPRS (Ministry of Jal Shakti) focuses on marine, inland, and hydropower infrastructure projects. This partnership is expected to leverage:
- RITES’ expertise in transport infrastructure and project management
- CWPRS’ advanced research capabilities in water resource engineering
Key details of the MoU:
| Partnership Focus | Impact |
| Engineering consultancy & research | Enhances RITES’ capabilities in marine, inland waterways & hydropower infrastructure |
| Transport infrastructure projects | Strengthens RITES’ consulting portfolio |
| Government collaboration | Boosts credibility & long-term business prospects |
RITES Q3FY25 earnings – cause for concern?
Despite the positive news from the MoU, RITES’ financial results reveal some challenges:
| Metric | Q3FY25 | Q3FY24 | YoY Change |
| Operating Revenue | ₹576 crore | ₹683 crore | ⬇️ 15.7% |
| Total Revenue | ₹614 crore | ₹700 crore | ⬇️ 12.3% |
| Net Profit (PAT) | ₹100.09 crore | ₹120.14 crore | ⬇️ 16.7% |
Why did revenue decline?
- Lower earnings from quality assurance & turnkey projects
- No export revenue during this period
This decline in revenue raises questions about RITES’ short-term growth prospects, making the MoU announcement even more significant for its future outlook.
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RITES’ order book – A silver lining?
While revenue dipped, RITES’ order book is at an all-time high of ₹7,978 crore as of December 31, 2024.
During Q3FY25, RITES secured:
📌 110+ new orders (including extensions)
📌 Total order value: ₹1,933 crore
This strong pipeline of projects suggests the company may see revenue stabilization in upcoming quarters.
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Technical analysis: Is RITES stock ready to rebound?
RITES’ stock has corrected 51% from its all-time highs and was facing strong selling pressure. However, technical analysts see a potential rebound if key support levels hold.
Technical insights from analysts:
- Support level: ₹200 (crucial for stability)
- Resistance levels: ₹237 (short-term), ₹240-₹250 (potential upside)
- 52-week high: ₹412.98
- 52-week low: ₹200.50
Key takeaway:
RITES’ stock is trading below the 100-week and 200-week Exponential Moving Averages (EMAs), indicating a weak long-term trend. However, an RSI recovery from oversold levels hints at a possible short-term bounce.
RITES share price: Is it a buy now?
With the MoU announcement, a robust order book, and a technical setup suggesting a rebound, investors might wonder if RITES is a buy at current levels.
For long-term investors, RITES offers strong fundamentals but needs earnings recovery. For traders, a breakout above ₹237 could signal an entry point.
Final thoughts
While the MoU announcement gave a short-term boost, RITES still faces challenges in revenue growth and stock trend reversal. Investors should watch Q4 earnings, new order inflows, and technical breakout levels to assess future potential.
