Prabhudas Lilladher's research report on RITES
We hosted RITES management for an NDR, where management reiterated its confidence in the medium-term growth outlook, supported by a relatively young order book, with around two-thirds of projects (12–18 months old) entering the execution phase over FY27–28. The company targets an order book of INR 100 bn by FY27-end, with at least 80% of new orders through competitive bidding, and guides for 10–20% revenue growth, while PAT growth is expected to trail initially as EBITDA margins normalize from the historical 27–28% to a sustainable 18–20%, with a minimum 15% PAT margin. The company also highlighted its record export order book of INR 21 bn, comprising INR 17.5 bn in rolling stock and INR 3.5 bn in consultancy, providing strong execution visibility through projects in Bangladesh, Mozambique, South Africa, Guyana and Nepal. We continue to like RITES for its asset-light business model, negative working capital cycle and expected ~19% RoE by FY28E.
Outlook
We model a 16% revenue CAGR over FY26–28E and, maintaining our 25x FY28E P/E, retain BUY with a target price of INR 275, along with an attractive 4–5.0% dividend yield.
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RITES - 0107026 - prabhu