Rail Vikas Nigam Limited, How Much Is It Worth To Invest?

Overview

Rail Vikas Nigam Limited (RVNL) is a Central Public Sector Enterprise (CPSE) of the Government of India’s Ministry of Railways. It was established in 2003 with the dual goals of raising extra-budgetary resources and expediting the realization of projects linked to the establishment and expansion of rail infrastructure capacity. RVNL is authorized to function as an Umbrella SPV to direct project development, resource mobilization, and other activities, or to create project-specific SPVs or any other financing structure deemed appropriate.

 

What Does RVNL Do?

RVNL is the Ministry of Railways’ construction arm in charge of project implementation and transportation infrastructure development. It is in charge of carrying out various rail infrastructure projects assigned by the Ministry of Railways, such as doubling, gauge conversion, new lines, railway electrification, major bridges, workshops, production units, and freight revenue sharing with Railways, in accordance with the concession agreement entered into with the Ministry of Railways.


Fundamental View

Fundamental analysis evaluates a security’s intrinsic value by analyzing macroeconomic and microeconomic factors, such as industry conditions and company management effectiveness, to determine if the security is undervalued or overvalued by other investors.


Some Key Financial Ratios for RVNL

• Price to Earning: 10.07
• Price to Book: 1.74
• Price to Sales: 0.627
• Earning Per Share: 6.81
• Return On Equity: 17.23%
• Return On Asset: 6.85%
• Net Profit Margin: 6.22%
• Operating Profit Margin: 6.04%
• EBITDA Margin: 11.06%
RVNL has been classified as a Navratna CPSE under the Ministry of Railways . The company’s authorized share capital is INR 3,000.00 crores and the total paid-up capital is INR 2,085.02 crores.

 

Some of The Major Projects Undertaken by RVNL

 

• Doubling and electrification of existing lines
• Construction of new lines
• Gauge conversion projects
• Metro railway projects
• Multimodal transport system projects
• Port connectivity projects
• Turnkey projects such as workshops, training institutes, and green buildings
• High-speed rail projects
• Cable-stayed bridges, river and road bridges, vertical lift bridge, mountain railways and tunnels

 

Technical View

Market data from the last few days demonstrate that the upward trend in share prices that began in March 2020 is still in place. Between July 2021 and August 2022, RVNL’s stock experienced a corrective period. Now is there going to be a correction phase again? After more than a year of rapid growth, prices have now slowed down a bit. The volume is relatively low. According to wave theory, If we regard wave 3 as the price surge, we can predict a complex correction in wave 4.

Chart Source: in.tradingview.com
At the end of this correction, prices may rise again. In this instance, wave 5’s growth rate may be slower. This is because wave 3 is an extended wave compared to wave 1. According to the Fibonacci scale, Wave 3 is 461% farther away than Wave 1. In that case, there doesn’t seem to be much of a big race waiting for Wave 5. Therefore, it is important to keep all these things in mind before investing in RVNL.

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