Rail Vikas Nigam Targets Orders Worth Up To Rs 1 Lakh Crore In Next One Year

Rail Vikas Nigam Ltd. has an ambitious plan of garnering orders totalling Rs 75,000-Rs 1,00,000 crore in the next one year, according to Rajesh Prasad, its director of operations.

RVNL functions as an extended arm of the Ministry of Railways, working for and on behalf of it. It takes on railway projects—such as installing new lines, railway electrification, metro projects, workshops, bridges—on a turnkey basis.

The Railway Minister had announced a capex programme of approximately $29 billion for FY24 in the Union budget, and the company expects to benefit from it. It is also eyeing the overseas market.

"RVNL is executing its business, not limited to railway infrastructure, but all kinds of infrastructure and not limited to India, but overseas also. We are being called as global rail infra from local rail infra," Prasad told BQ Prime's Sajeet Manghat.

"We are focusing on railway infrastructure overseas in African countries and then, in neighbouring countries like Bangladesh, Sri Lanka and even Maldives. We have started executing the Maldives project."

The Navratna stock has risen nearly over 300% in the past one year. The year-to-date performance of the stock is over 77%, outperforming the index and key benchmarks.

The company also undertakes project development and resource mobilisation—directly or by creating project-specific special purpose vehicles or through any other financing structure found suitable.

According to Prasad, the SPV model that it follows is successful. It has formed five SPVs that have been commissioned. The revenue from these SPVs is around Rs 1,00,000 crore, without any additional investments by the central government, he said.

The Ministry of Railways has assigned 180 projects, of which the company has completed 140, Prasad said. The company have been executing around 30% of all railway infrastructure projects in the country, he said.

The order book of RVNL, as on March 31, 2023, was around Rs 57,000 crore. Out of this, Rs 36,000 crore was through nomination basis and the remaining through the bidding process. The ratio is going to change in the years to come, Prasad said.

The company is eyeing metro segments, railway infrastructure, tunnels, mega bridges and overseas projects, he said.

RVNL recently received two orders from Madhya Kshetra Vidyut Vitaran Co. in Jabalpur. In the recent past, the company bagged a Rs 3,000 crore order from Chennai Metro for three underground packages where 16 metro stations were required to be constructed.

RVNL has also entered into the high-margin business of management consultancy. It has bagged three contracts from the National Highways & Infrastructure Development Corp. Ltd. in the north-east region, Prasad said. With respect to consultancy project execution, the margin may be more than two times, he said.

The long-term vision of the company is to have "healthy" overseas projects in the coming years, according to him.

Shares of RVNL fell 1.74% to Rs 121.3 apiece, as compared with a 0.56% fall in the Nifty 50, as of 3:30 p.m. on Friday.

Both the analysts tracking the company maintain a “buy” rating, according to Bloomberg data.