RVNL Shares Tumble Following Disappointing Quarterly Results
Shares of Rail Vikas Nigam Limited (RVNL), a prominent railway infrastructure company, witnessed a significant decline of 3% during early trading on Wednesday, November 12, hitting an intraday low of ₹308 per share. This downward movement came as a direct response to the company's September quarter financial performance, which failed to meet market expectations.
Quarterly Financial Performance Analysis
The company, which announced its results after market hours on Tuesday, reported concerning numbers across key financial metrics. Consolidated net profit plummeted by 20% year-on-year to ₹230.52 crore for the September quarter, compared to ₹286.90 crore in the same period last year. This decline was primarily driven by substantially higher operational expenses.
While profitability metrics showed weakness, the company did register some positive movement in revenue. Total income increased to ₹5,333.36 crore from ₹5,136.07 crore during the July-September period, representing modest growth on a year-on-year basis.
The company's operating expenses revealed the core challenge, surging to ₹5,015 crore during the reporting quarter from ₹3,972 crore in the previous quarter and ₹4,731 crore in the year-ago period. At the operating level, EBITDA stood at ₹217 crore, down from ₹256 crore in the corresponding quarter last year, with margins contracting by 100 basis points to 4%.
Sequential Improvement and Recent Order Wins
Despite the year-on-year decline, the quarterly numbers showed notable improvement compared to the preceding June quarter. Net profit surged 72.8% quarter-on-quarter, while revenue increased by 31% on the same basis, indicating potential recovery momentum.
In positive developments, RVNL has been actively securing new projects. Last week, the company secured a ₹272 crore order from Central Railway for the design, supply, erection, testing, and commissioning of a 220/132/55 kV traction substation and related infrastructure for the Daund-Solapur sections. This project aims to achieve a 3,000 MT loading target using EPC mode.
This marks the company's fourth major order in less than two months. In October alone, Rail Vikas Nigam received three significant orders, including a substantial ₹165.5 crore infrastructure project awarded by the North Eastern Railway as part of its regular business operations.
Stock Performance and Market Outlook
The company's shares resumed their declining trend in October after briefly ending a three-month losing streak in September. So far in November, the stock has extended its downward movement, losing an additional 3.35% in value.
The current bearish trend follows the stock hitting its all-time high of ₹647 per share. At current price levels, the shares are trading approximately 51% below their record peak. On a yearly performance basis, the stock has declined by 25% year-to-date, potentially marking its first annual decline since its listing in 2019 if the trend persists.
Investors are closely monitoring the company's ability to convert its growing order book into improved profitability while managing operational costs effectively. The railway infrastructure sector remains crucial to India's economic development, and RVNL's performance will be watched as an indicator of broader sector health.
