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RITES Ltd : Accelerating Growth on Export Opportunities and Robust Order Book




  • Contract Agreements: RITES has inked deals with NRZ for the supply of rolling stock, including 3000 HP Diesel Electric Locomotives and High-Sided Open Wagons, valued at Rs 664 Cr. The contract's execution is subject to funding approval, expected in a couple of months.

  • Export Order Prospects: Anticipating the execution of the contract in FY24, RITES foresees a majority of the contract being fulfilled in FY25 and FY26. Additionally, the company is actively pursuing more export orders, including the potential export of Vande Bharat Train to South-East Asian and African markets.

  • Revised Revenue Projection: With the addition of new export orders, RITES' revenue growth projection for FY25 is revised upward by 5% to 17%.

  • Robust Order Book: Having achieved an order inflow of Rs 3,080 Cr in FY23, RITES boasts a healthy order book of Rs 5,870 Cr as of Mar 31, 2023, ensuring revenue visibility for the next two years. The recent inclusion of a Rs 664 Cr export order elevates the unadjusted order book to Rs 6,600 Cr, and further export orders are expected to maintain the book's strength.

  • Sustainable Consultancy Growth: The consultancy segment, accounting for 41% of the order book, presents a high-margin business with promising growth prospects in both domestic and overseas markets.

  • Capital Expenditure: RITES estimates a Capex of Rs 100 Cr for FY24.

  • Strong Dividend Payout: In FY23, the board recommended a dividend of Rs 492 Cr (86% payout, Rs 20.5/share), translating to an attractive dividend yield of 5.12% based on the CMP. Shareholders can expect the company to uphold its healthy dividend payout policy.

  • Solid Cash & Bank Balance: RITES maintains a healthy cash and bank balance of Rs 1.136 Cr as of Mar 31, 2023, equivalent to 12% of the current market cap.

  • Key Risks: Revenue growth may be impacted by slower order wins, while higher competitive intensity could affect margins

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