Rites Ltd. share price target

We recently hosted Mr. Rajeev Mehrotra, CMD of Rites Ltd to gain insights on company's growth strategy and industry outlook. RITES (niche player providing design, engineering and consultancy services in transportation infrastructure) is well-positioned to gain traction in the infrastructure sector on the back of: 1) an impressive execution track record; 2) a strong balance...

RITES- a Miniratna (Schedule A) CPSE under Ministry of Railways, is an engineering consultancy company. It is a leading multi-disciplinary engineering and consultancy organization specialized in the field of transport infrastructure providing diversified

RITES- a proxy play to Railway capex, presents value for investors due to its strong and diversified order book, association with MoR, healthy financials, high dividend payout and attractive valuations

The Consultancy-Domestic segment grew ~2% YoY/10% QoQ to `2,659.3mn. Currently rail consultancy orders constitute 62% (50-60% on nomination basis) of total consultancy orders worth `25,320mn. Under consultancy, the quality assurance revenue...

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RITES Ltd., a Government of India Enterprise was established in 1974, under the aegis of Indian Railways. RITES is incorporated in India as a Public Limited Company under the Companies Act, 1956 and is governed by a Board of Directors which includes persons of eminence from various sectors of engineering and management. RITES Ltd., an ISO 9001-2008 company, is a multi-disciplinary consultancy organization in the fields of transport, infrastructure and related technologies. The company also in the business segment of Leasing (Abroad), Consultancy...

In Q1FY20, RITES ltd. reported stellar sales growth of 62% YoY at Rs 538 cr led by strong execution and higher contribution from turnkey projects. EBIDTA of Rs 131 cr grew strongly by 47% YoY, however, EBIDTA margin at 24.3 % fell by 230 bps due to service mix.

neering and transport consultancy services. It provides overall services from concept to commissioning ,across all areas of transport infrastructure. Within infra and energy sectors ,it has executed many projects such as building urban transport, roads and highways, ports, inland waterways, airports, institutional buildings and renewable energy. However, consultancy service in railway sector contributes a Sector Outlook major part of its business. With an experience of more than 44 years , Rites has undertaken several Stock...

We initiate coverage on RITES as a BUY with a price objective of Rs.365, representing a potential upside of 26% from the CMP of Rs.290 over a period of 24 months. We have used the P/E multiple approach to value RITES and assign a multiple of 12.5x to the FY22 EPS of Rs.29.2