Railways – India’s Growth Story

Today , am going to mention a stock which am reviewing since 3 months now and finally decided to start accumulation on this stock .

Recommendation : Buy / Horizon : 3 to 5 Yrs / Target : 100%

Stock Name : RVNL ( Rail Vikas Nigam Ltd)

Rail Vikas Nigam is engaged in creating vital rail infrastructure and provide vital port linkage including the corridors connecting the port of Hinterlands. We expect this company to play a vital role in future , and who knows the govt might divest stake in this for private players in coming years!

Industry Analysis :

Competitive RivalryLOWLow , Less Govt backed players in supporting Rail Infra.
Supplier PowerHIGHConcentrated industry with few players
Buyer PowerLOWPublic Projects hence not directly applicable.
Threat of Substitution. LOWLow , requires specialization
Threat of New EntryLOWLow , requires specialization , government clearance.
Fundamentals Share holding Pattern 
 In CroresGovernment88%
Market Cap4,000FII0.40%
Fy-19/20 Total Sales14,000DII 2.28%
Operating Profit662Public9.4800%
5 Year Avg Div Payout25%  
Avg ROCE in 3 years10% to 12%  
Avg ROE in 3 years14% to 17%  

Few Concerns to note on the stock
–Contingent liabilities of Rs.44111.27 Cr.
–Consistent other income appearances in the P/L sheet
–1 year average price change is negligible
–Low ROCE / ROE then few other players

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