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IDBI Capital Report
Rail Vikas Nigam Ltd. Q1 FY25 profit after tax was below our estimates by 30%, this was due to weak execution due to central elections and geopolitical turmoil. Company guided revenue to be flat at Rs 220 billion for FY25 and guided Ebitda margins in range of 6- 6.5%. Order book at Rs 830 billion is four times trailing twelve months revenue and order book from competitive bid project is inching up to 40%+.
Rail Vikas Nigam highlighted that it has witnessed decline in margins of two of its major projects but management is confident that they will improve the execution in H2 FY25. Post the result we changed target price to Rs 549, this factor's weak performance of Q1 FY25 and increased PER multiple.
At target price, Rail Vikas Nigam implied multiple is 70 times FY26E earning per share. Retain Hold rating; we have modeled earning per share increase at 8% YoY in FY25E and FY26E.
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