RVNL‘s share price continued to tank after the company posted results that were below analyst expectations. Analysts at Antique Broking see a very bleak future ahead for the railway major at the bourses.

The RVNL Analyst: The research team maintained its “sell” rating for the stock cutting the price target to ₹251 from ₹283. The target indicates around 44% downside from the stock’s last closing price of ₹447.95.

The RVNL Thesis: The analysts observed that RVNL’s Q2 revenue remained flat at around ₹4,900 crore, coming in 6% below estimates, primarily due to the monsoon impact. Weak margins further impacted the performance, with EBITDA at ₹270 crore, down 9% year on year — and 12% below expectations.

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A higher tax rate of 26% this quarter, compared to 18% in the prior-year quarter, added to the pressure, resulting in a 27% decline in profit after tax to ₹280 crore, 19% below the analysts’ estimates. The analysts pointed out that RVNL's performance in the first half of FY25 has been underwhelming, with revenue, EBITDA and profit after tax down by 15%, 30% and 30%, respectively, affected by monsoon challenges and Union Election-related labour shortages.

Antique notes that RVNL’s strong revenue growth up to FY22 has since slowed. The order book and scope expansions have been stable over the past two years, but annual revenue growth is expected to remain muted from FY23 to FY25.

Projections for FY25-27 indicate that new order wins will likely match execution levels, leading to a relatively stagnant order book. While RVNL has signed MoUs, the potential revenue from these agreements remains uncertain. At an estimated valuation of 52 times FY27 earnings per share, Antique believes the stock’s current price largely factors in any potential upside.

Price Action: RVNL’s share price was down 3.21% to trade at ₹433.55 in the early hours of trading on Monday.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.