RVNL and Ircon Shares Drop as Railway Stocks Fall up to 7% After Weak Q2 Earnings
Railway stocks tumbled on Friday following muted quarterly results from Rail Vikas Nigam Ltd (RVNL) and Ircon International Ltd for the quarter ending September 30, 2024. These PSU stocks, which have previously shown strong returns, led the declines, with shares dropping as much as 7% in the day’s trading.
RVNL’s Q2 Performance
Rail Vikas Nigam reported a significant drop in profit along with a slight decrease in revenue for the September quarter. The company’s net profit declined 27% year-on-year (YoY) to ₹286.9 crore, while revenue from operations fell by 1.2% YoY to ₹4,855 crore. The company’s EBITDA fell 9% YoY to ₹271.5 crore, with a margin contraction of 40 basis points to 5.6%. RVNL’s shares, currently under BSE and NSE’s additional surveillance due to recent price volatility, slid 7.02% to ₹444, with its market cap dropping below ₹94,000 crore. The stock has seen a correction of over 31% from its 52-week high of ₹647 reached in July 2024.
Ircon International’s Q2 Results
Ircon International also faced a decline, with its net profit down 17.9% YoY to ₹206 crore and revenue falling 19.3% YoY to ₹2,447.5 crore. EBITDA decreased by over 23% YoY to ₹201 crore. Shares of Ircon International fell 5.95% to ₹202.30, reducing its market cap below ₹20,000 crore. The stock has dropped over 42% from its 52-week high of ₹351.65, also hit in July 2024.
Impact on Other Railway Stocks
Other railway stocks were also affected:
- Indian Railway Finance Corporation Ltd (IRFC) fell 2% to ₹150.35
- RITES Ltd dropped 2% to ₹286.05
- Indian Railway Catering and Tourism Corporation Ltd (IRCTC) declined 1% to ₹833.55
These stocks have each corrected 28-35% from their 52-week highs.
Brokerage Recommendations
- RITES: Elara Capital upgraded RITES to ‘buy,’ citing a potential rebound in exports by FY26 and strong order inflows. They have a target price of ₹365, while Axis Securities has a target of ₹325.
- Ircon International: Antique Stock Broking gave a ‘hold’ rating with a target price of ₹251.
- IRCTC: IDBI Capital assigned a ‘hold’ rating with a target price of ₹927. They noted that while the catering segment underperformed, IRCTC’s internet ticketing business showed improvement. They expect the company to benefit from increased capacity due to Dedicated Freight Corridor (DFC) expansion, growth in Vande Bharat trains, and collaborations with food aggregators.
These revised ratings come amidst a sector-wide correction as railway PSUs continue to face earnings pressure and market volatility.
