RITES Stock Plunges 37% from 52-Week High: Key Triggers and Target Price Revealed
30th Jan 2025
RITES Q3 Results and Margin Decline
PSU railway stock RITES Ltd has fallen 37 per cent from its 52-week high levels, but Antique Stock Broking sees scope for further downside ahead. The company reported a 16 per cent YoY decline in Q3 revenues, which was 17 per cent below the consensus estimate. Segment-wise, the turnkey segment revenue declined more than expected. Additionally, EBITDA declined 31 per cent, and EBITDA margin was lower at 20.4 per cent against 24.7 per cent in the year-ago quarter and 19.6 per cent in the September 2024 quarter.
RITES Order Book and Inflows
RITES' order book has increased sequentially to Rs 8,000 crore, which was 3.5 times its trailing 12-month revenues. The company saw order inflows of Rs 2,000 crore in 3QFY25, with 65% in the turnkey segment and the remaining in consultancy and others.
Outlook and Valuation
An execution uptick in exports and incremental order inflows are the key catalysts for the stock going ahead, the brokerage said as it suggested a 'Hold' rating on the stock. Antique has cut its EPS estimates by 8-10 per cent for the railway PSU over FY25-27 to factor in the weak numbers and compression in export margin. On revised estimates, it said the stock trades at 26 times FY27 EPS and suggested a revised target price of Rs 243 on RITES against Rs 325 earlier, valuing the company at 25 times FY27 EPS.
PSU railway stock RITES Ltd has fallen 37 per cent from its 52-week high levels, but Antique Stock Broking sees scope for further downside ahead. The company reported a 16 per cent YoY decline in Q3 revenues, which was 17 per cent below the consensus estimate. Segment-wise, the turnkey segment revenue declined more than expected. Additionally, EBITDA declined 31 per cent, and EBITDA margin was lower at 20.4 per cent against 24.7 per cent in the year-ago quarter and 19.6 per cent in the September 2024 quarter.
RITES Order Book and Inflows
RITES' order book has increased sequentially to Rs 8,000 crore, which was 3.5 times its trailing 12-month revenues. The company saw order inflows of Rs 2,000 crore in 3QFY25, with 65% in the turnkey segment and the remaining in consultancy and others.
Outlook and Valuation
An execution uptick in exports and incremental order inflows are the key catalysts for the stock going ahead, the brokerage said as it suggested a 'Hold' rating on the stock. Antique has cut its EPS estimates by 8-10 per cent for the railway PSU over FY25-27 to factor in the weak numbers and compression in export margin. On revised estimates, it said the stock trades at 26 times FY27 EPS and suggested a revised target price of Rs 243 on RITES against Rs 325 earlier, valuing the company at 25 times FY27 EPS.