Rites Ltd. share price target

Guidance on segmental revenue: For FY22E, RITE expects export revenue of Rs9bn which will be scattered over the next three quarters. Consultancy segment is growing and RITE expected revenue increase of 10% pa over the next 3-4 years. QA has reached Pre Covid level in Q2FY22. Turnkey segment revenue could decline in FY22E...

We recommend a BUY with TP of Rs. 315/share.

RITES Ltd (RITE) Q4FY21 PAT at Rs1.4bn is 14% lower than our and consensus estimate, as revenue was impacted from covid disruption (supply chain issue). Consolidated EBITDA margin remained healthy at 29% (up 50bps YoY) and was driven by export orders and cost management (employee strength reduced by 9% YoY). In FY21, RITE received orders of Rs21bn and order inflow could be strongly higher in FY22 as company is already L1 in order of Rs14bn. Balance sheet continues to remain lean, CF was strong with OCF at Rs5bn vs Rs3bn in FY20. Company has increased div payout to 72% in FY21 vs 65% in FY20. RITES stock performance has been muted in the last 12...

We retain a BUY rating on the stock with a target price of Rs. 315 (earlier target Rs 279), implying an upside of 18% from CMP.

Rail capex increased from ~US$6bn/annum to ~US$24bn/annum from 2014 to 2020 and is expected to further increase to ~US$33bn/annum over the next 10 years. The near term key focus would be on electrification, signalling and gauge conversion while station re-development, DFC and HSR remain medium to long term focus areas. NIP, a major catalyst for infra investments in Airports, Ports, Roads, Renewables, etc. remains a pivotal area for RITES....

Softness in Consultancy and Turnkey led to subdued Q3FY21 RITES reported revenues of `4.3bn (-28% YoY) with subdued Consultancy-Domestic and Turnkey performance which declined 18% YoY and 19.2% YoY to `2.17bn and `1.58bn respectively. The softness in consultancy was led by QA- related site level inspection delays and construction marred by land acquisition. For 9MFY21, the topline declined 19% YoY to `11.8bn. With planned 34% increase in budgetary capex for rail (lasting upto 2030), Metro and Infra projects the company sees foreseeable double digit growth in FY22 over FY20. The company reported EBITDA of `1.1bn down 25% YoY. The...

Q3FY21 Snapshot: Revenue decline by 28% YoY to Rs4.5bn. Segment wise, lower execution is led by 15% decline in consultancy revenue, negligible exports orders in Q3FY21 vs Rs900mn revenue in Q3FY20. Despite lower execution, EBITDA margin improved 150bps YoY to 28% and this is driven by lower employee, travel and other...

We retain BUY with a target price of Rs 279 (earlier target Rs 317).

Order book continues to remain strong: As on H1FY21, Order Book at Rs 66.6bn gives a visibility of ~2.5 years. RITE has received orders worth Rs9.5bn in Q2FY21. In terms of new opportunity, RITE is bidding for a) PMC work in high speed Rail corridor...

RITIES has an order book of Rs 6,661 cr which gives visibility for more than 2 years; Mgtm is confident of regaining momentum with easing of lockdown restrictions. We expect the company to post Revenues/PAT at CAGR of 7%/5% respectively over FY20-22E. We retain BUY with a target price of Rs 317