RITES Ltd. is a Government of India enterprise established in 1974 fundamental stocks

Dear investor,

Please find below mentioned short term fundamental stock for delivery purpose.

 

Company	CMP	Target	BSE Code	NSE Code
RITES  Ltd.	245	290	541556	RITES

 

Fundamental

• Market Cap:  6,136 Cr.
• Current Price:  245
• 52 weeks High / Low  331.00 / 190.65
• Book Value:  105.33
• Stock P/E: 9.96
• Dividend Yield: 4.07 %
• ROCE: 31.80 %
• ROE: 20.25 %
• Sales Growth (3Yrs): 18.91 %
• Listed on BSE and NSE
• Company Website
• Face Value:  10.00

• PEG Ratio:
• Promoter holding: 72.02 %
• Pledged percentage: 0.00 %
• Debt:  39.80 Cr.
• Price to Earning: 9.96
• EPS:  24.64
• Net profit:  616.10 Cr.
• Profit growth: 29.91 %
• Profit growth 7Years: %
• Net profit preceding 12months: 622.29 Cr.
• Profit growth 3Years: 11.35 %
• Dividend yield: 4.07 %
• Debt to equity: 0.02
• Sales last year:  2,047 Cr.
• Sales growth: 20.85 %
• Unpledged promoter holding: 72.02 %
• Investments:  260.60 Cr.

RITES Ltd. is a Government of India enterprise established in 1974. The company is a multidisciplinary engineering and consultancy organization providing diversified and comprehensive array of services from concept to commissioning in all facets of transport infrastructure and related technologies. RITES Ltd. is an internationally recognized consultant with operational experience in over 55 countries in Asia, Africa, Latin America, South America and Middle East regions. The company is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia).  LIC is the largest non-promoter holder with ~8% shareholding. Market cap of RITES Ltd. is Rs 6,250 cr.
 

Investment rationale
 

Order flow continues even in prevailing lockdown: RITES had emerged as a successful bidder in a major export order from Africa in February. The final price negotiations of the same order for an export value of about Rs 678 crore have been concluded during lockdown period. Additionally, management is confident of achieving the outlook given for financial performance of FY20 and does not expect any significant impact of COVID - 19 on the topline.

Wide range of consultancy services for diversified sectors: The Company has significant presence as a transport infrastructure consultancy organization in the railway sector. However, RITES also provides consultancy services across infrastructure and energy sectors including urban transport, roads and highways, ports, inland waterways, airports, institutional buildings, ropeways, power procurement and renewable energy.

Undertaking turnkey projects: RITES undertakes turnkey projects on engineering, procurement and construction basis for railway lines, track doubling, 3rd line, railway electrification, upgradation works for railway transport systems and workshops, railway stations, and even construction of institutional/ residential/ commercial buildings.

Complete solutions including maintenance: RITES does complete solutions that include wagon manufacturing, renewable energy generation and power procurement for Indian Railways through collaborations or by way of joint venture arrangements. Sometimes it is offered through subsidiaries or consortium arrangements as well. Leasing, export, maintenance and rehabilitation of locomotives and rolling stock is also within the purview of activities conducted by RITES.

Asset light model, attractive order book: The Company follows an asset light model with major chunk (+50%) of business coming from consultancy space where substantial costs are manpower. Such business services also command very high margins (+40%) unlike that in turnkey, leasing and export contracts. The blended margin though is at +20%. Naturally, the company has a very high asset turnover ratio which enables it post robust set of return ratios. The company as of Q4FY20 has an outstanding order book of Rs6,223 crores which is ~2.5x of its FY20 consolidated sales which provides revenue visibility for near term. We recommend it on account of strong order book, asset light model, high margins and status of complete solution provider. The stock looks attractively valued at 9.8x of its one year forward earnings.​
 Positive:-

Company has reduced debt.

Company is virtually debt free.

Stock is providing a good dividend yield of 4.07%.

Company is expected to give good quarter

Company has been maintaining a healthy dividend payout of 44.18%

Negative:-

Promoter holding has decreased by -5.37% over last quarter

Earnings include an other income of Rs.267.76 Cr.

Duration of recommendation: Short to Medium term.

 

Best Regards,
Team kirtykumari60@gmail.com