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IDBI Capital Report
Rites Ltd.'s Q1 FY24 profit after tax came below with our estimates by 16%. and was led by lower execution, as revenue has declined by 10% YoY in the Q1 and Ebitda margin is flattish.
Q1 FY24 earnings per share forms 20% to FY24E EPS. Just like previous quarters, company is witnessing YoY revenue decline but margin is stable.
Rites has tied up with Indian Railway Finance Corporation, DNV Norway to shore up its consultancy business as railway quality assurance business is seeing competition and lower margin.
Company has declared dividend per share of Rs 3.75 for Q1 and this works out as 75% payout on its Q1 FY24 EPS. In FY23 dividend per share was Rs 20.5 at pay-out of 91%.
We maintain our estimate with 'Hold' rating.
Post the result we have increased valuation multiple for Rites to 18 times FY25E EPS with revised target price of Rs 477 (earlier Rs 398).
We will become constructive on the stock, once execution picks up.
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