Railway Engineering Stock Faces Extended Bearish Phase
RITES Limited, a prominent railway-associated stock, has been experiencing significant pressure from Dalal Street investors as its declining trend extended into the fifth consecutive month during November. The stock has witnessed a cumulative decline of 13% in its value, with its price settling at ₹244.40 per share.
This prolonged downturn comes despite a notable recovery pattern earlier this year. The stock demonstrated a sharp reversal in March, successfully breaking its extended bearish phase and maintaining an upward trajectory for the subsequent couple of months. However, this recovery proved temporary as the losing streak resumed in July, continuing through November.
Brokerage Bullish on Recovery Prospects
Domestic brokerage firm Axis Securities maintains an optimistic outlook for RITES, anticipating an end to the prolonged bearish trend. The brokerage attributes this positive expectation to improving earnings performance and a robust order book position that includes high-margin projects.
The company, which operates as a multidisciplinary engineering and consultancy organization offering comprehensive services from concept to commissioning across transport infrastructure and related technologies, has demonstrated strong business development capabilities. RITES secured over 150 new orders valued at ₹851 crore, elevating its total order book to an impressive ₹9,090 crore.
This substantial order backlog ensures strong revenue visibility for the next 2 to 2.5 years, providing a solid foundation for future growth. Axis Securities particularly emphasizes that 34% of the order book comprises high-margin consultancy segments, significantly enhancing the company's profitability profile.
Export Growth and Turnkey Projects Driving Future Performance
On the international front, RITES has demonstrated promising expansion with export orders worth ₹1,541 crore. The company has witnessed improving revenue contribution from exports since the second quarter of FY26, indicating strengthening global presence.
Given this positive momentum, Axis Securities projects the company to achieve a compounded annual growth rate (CAGR) of 23% over FY25 to FY27. The brokerage highlights that turnkey projects, which account for 46% of the company's order book, are expected to serve as key drivers for revenue growth.
Although turnkey sales have currently experienced a decline as most projects remain in initial stages, the progression of execution and transition to advanced stages are likely to accelerate revenue momentum in the coming quarters. Backed by a robust project pipeline and increasing opportunities across the infrastructure sector, the company remains well-positioned to deliver sustainable long-term growth.
Consequently, Axis Securities maintains its 'BUY' rating on RITES stock with a target price of ₹271 per share, suggesting an upside potential of 11% from the stock's previous closing price. This optimistic outlook contrasts with the current market performance, presenting potential opportunities for investors who recognize the underlying strength in the company's order book and execution capabilities.
