Rail Vikas Nigam’s share price surged 73% over the past month as the freshly crowned ‘Navratna’ bags orders worth thousands of crores on the government’s infrastructure push for railways. From the closing price of Rs 75.2 per equity share on 3 April, the scrip touched an intraday high of Rs 130.1 on the NSE, hitting its upper circuit of 10%.
Rail Vikas Nigam achieved a significant milestone by being conferred with Navratna status, making it the 13th Central Public Sector Enterprise (CPSE) to attain this recognition. Prior to this, the Navratna status was granted to Engineers India in 2014. On Tuesday, RVNL emerged as the lowest bidder for two large-scale projects across Chennai and Rajasthan, with the total consideration of both projects in the thousands of crores.
“The outlook for the long term would be re-rated post the change in status and likely to benefit from the Government Infra capex push. Investors, if they are holding, should think of booking profits as the stock has rallied more than 60% in the last 2 weeks. If we analyse infrastructure themes, especially from the budget 2023 pages, the government has allocated the Railways Rs 2.4 lakh crore out of its Rs 10 lakh crore capex. Hence, railway stocks have been in limelight and stocks like RVNL, IRCON, IRFC and rest majority of railway counters saw an upward move since budget 2023. After a sharp rally in the sector we advise fresh investors to wait and watch for dips or corrections to accumulate railway themes for the long term,” said Prashanth Tapse – Research Analyst, Senior VP (Research), Mehta Equities.
Outlook for RVNL stock
“The RVNL stock has broken out from a very famous technical chart pattern of Cup and handle around the 85 level. The outlook for the stock is positive for the medium term with an entry to be done for fresh investors on a consolidation. Even from a fundamental perspective, the stock has shown a good on-year rise in its operating profit and net sales and is also trading at a discount to its historical valuations,” said Rahul Ghose, Founder & CEO, Hedged.
Should Investors buy, hold or sell Rail Vikas Nigam?
Rahul Ghose advised fresh investors to initiate a buy on this stock after a small consolidation at the 115/110 levels, keeping a stop loss below 101. The stock is also seen walking the band in higher time frame charts, which adds to its positive bias. For those who already hold the stock, Ghose recommended that they hold the same with a stop loss at 100.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart, said that RVNL is in a strong uptrend and may see some pause at an immediate resistance level of 140 but may head towards 150 levels. On the downside, the major support level is Rs 100 at any correction, while Rs 87 is the next critical demand level. Gour said, “Investors have to suggest that they please follow the buy-on-dip strategy when taking a new position on the counter.”
“We advise investors to enter at lower levels as we feel that most of the positives are already priced in and timely execution of the order book would be key for further traction in the stock over the medium-to-long term horizon,” said Manish Chowdhury, Head of Research, Stoxbox.