IRCON Shares Back In Green But Analyst Advises Caution

IRCON‘s share price bounced back in the green on Thursday as several of its peers in the railway space were surging. Shares of the company were under pressure on Wednesday as the company’s results failed to impress investors. Analysts at IDBI Capital are also cautious about the stock as Q4 numbers missed their estimates.

The IRCON Analyst: Vishal Periwal-led analyst team at IDBI Capital maintained its “hold” rating for the stock with a target price of ₹268.

IRCON Thesis: The brokerage firm said that IRCON’s adjusted PAT (profit after tax) for the March quarter came in lower than its estimate. The analysts added that operating performance was weak, with revenue declining by 1% and adjusted EBITDA margin remaining flat quarter-on-quarter at 6.2%.

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The brokerage also highlighted that the railway major has guided for flat revenue growth on a year-on-year basis for FY25 and aims to maintain EBITDA margins at the current level. The company's order book has shown weakness, currently standing at ₹27,200 crore compared to ₹35,100 crore at the end of March 2023. As per the analysts, this decrease in the order book could impact revenue for FY25 and FY26, with some effects already visible in Q4FY24.

However, the brokerage has added that the company has submitted bids for multiple projects and expects new bids to be announced. Analysts anticipated that if IRCON secures new orders worth ₹10,000-15,000 crore, it might achieve better revenue growth in FY25. Margins on the other hand are expected to be in the same range, with PAT margins projected to be around 7-7.5% for FY25.

Price Action: IRCON’s share price was up 3.55% to trade at ₹288.95 in early trade on Monday.

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