Railway stocks have been on a consistent downtrend since the budget came out, however, analysts at IDBI Capital say that IRCON and RVNL can show some resilience at these levels.
The Railway Analyst: The Vishal Periwal-led analyst team at IDBI Capital maintained the “hold” rating for RVNL but raised the target price to ₹248. The team downgraded IRCON from “buy” to “hold” with a price target of ₹216.
The Railway Thesis: The analysts said that RVNL’s performance during the December quarter was weak. The analysts pointed out that the railway company’s revenue and net profits both declined by 6% on a year-on-year basis.
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However, the company’s order inflow has remained consistent, the brokerage added. The brokerage pointed out that the company’s order inflow for the quarter stood at ₹1,700 crore. The analysts also highlighted that the company has improved the diversification of their order wins. The 9-month inflow of orders included (20%) railways, metro (26%), irrigation (14%), and power (30%), with the remaining 10% coming from the road sector.
IRCON, on the other hand, had a good quarter as per the analysts. The company’s revenue was robust and order execution was consistent. However, the brokerage said that the company’s order wins have been lukewarm. The analysts also added that the recent run-up in IRCON’s share price has made the stock a little expensive leading to a rating downgrade.
Price Action: IRCON’s share price was down 8.21% to trade at ₹204.10. RVNL’s share price was down 9% to trade at ₹235.30 on Monday.
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