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Review By Rudra Shares & Stock Brokers Ltd on April 1, 2019



Issue Open: 29  March  2019 to 03 April 2019

  »» Issue Type:  Book Built Issue IPO

    »» Issue Size: 

           253,457,280 Equity Shares @ 10 aggregating up to ` 482 cr

 »» Face ValueRs 10 per Equity Share 

  »» Issue PriceRs 17 - Rs 19 per Equity Share 

  »» Market Lot780 Shares 

  »» Minimum Order Quantity780 Shares 

  »» Listing At:   NSE, BSE

A Discount of Rs 0.5 per equity share is offered in Retail and employee quota.




The share capital of Company is set forth below:-

                                                                            (Amount in Rs except share data)

Authorized Share Capital:-

      3,000,000,000 Equity Shares @10 Aggregate value 30,000,000,000 cr


Issued, subscribed and paid up capital before the Issue:-

    2,085,020,100 Equity Shares @10 Aggregate value 20,850,201,000 cr


Present Issue:-

    253,457,280 Equity Shares @ 10 aggregating up to ` 482 cr




       The objects of the Offer are


  • To carry out the disinvestment of Equity Shares held by the Selling Shareholder in the company.


  • To achieve the benefits of listing the Equity Shares on the Stock Exchanges. 




Incorporated in 2003 by the Ministry of Railways, is a miniratna Central Public Sector Enterprise wholly owned by the Government.

RVNL is in the business of executing all types of railway projects, including new lines, doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges, construction of cable stayed bridges, institution buildings.

Indian Railways is the major client of the company. Besides, public sector undertakings, state and central government departments, ministries are the other clients.

During the financial year ending March 31, 2018, RVNL have completed a total of 885.50 rkm of project length which included 315.20 rkm of doubling and 425 rkm of railway electrification.




  • To leverage position as an executing agency in MoR's investment plan for ramping of rail infrastructure.
  • Securing of rail infrastructure projects from other ministries/ PSUs.
  • Focus on high value projects.
  • Implementation of railway workshops and factory projects.




  • Expertise in undertaking all stages of project development and execution from conceptualisation to commissioning
  • Undertaken diverse categories of projects with an asset light model.
  • Empowerment by MoR for sanctioning project estimates and award of contracts.
  • Strong Order Book (Rs 77504cr).
  • Experienced Board and Key Managerial Personnel
  • Established a consistent track record of financial performance and growth.






Company has established a consistent track record of financial performance and growth. Revenue from operations on consolidated basis for the Financial Year 2018 and the six months ended September 30, 2018 aggregated to Rs 7597.36 cr and Rs 3622.88 cr, respectively, increased at a CAGR of 29.36%. Net profit stood at Rs 569.36 cr and Rs 253.64 cr, respectively, for the same periods, which is increased at a CAGR of 15.20%. EBITDA for Financial Year ended March 31, 2018 was recorded at  Rs 713.53 cr.

 As on December 2018, RVNL has an order book of Rs 77,504 crore which includes 102 ongoing projects. The company is expected to finish approximately Rs 30,000cr order book in the next 2 to 3 years as per the management guidance.

With an investment of Rs 648.57 cr as on September 30, 2018 as equity in various SPVs formed along with strategic partners, it is executing projects by contribution of equity by other partners and by raising debts from financial institutions.

On an consolidated basis, the Net worth of Company as at September 30, 2018 was Rs 4062.11 cr.  The net asset value per Equity Share stood for the same period stood at Rs 19.48.




  • Significant dependence on the MoR (Ministry of Railways) for sourcing and financing projects which may impact the revenue of the Company. As on December 31, 2018, order book from MoR was Rs 74,492.48 cr or 96.11% of total order book.
  • Substantial portion of order book depends on two projects viz. the hill railway projects of Rishikesh Karnprayag new line project and Bhanupalli- Bilaspur Beri new line project. Any delay/ review of these projects may adversely affect business.
  • Delay in ongoing metro projects.
  • Third party Risk 
  • The interests of the GOI as controlling shareholder may conflict with interests as a shareholder.  


For 2018-19, the total capital and development expenditure of railways has been pegged at Rs 148,528 crore. Further, 100% FDI has been approved by Government for the activity of Indian Railways – construction, operation & maintenance of the entire railway segment, as per CARE Report.


Also, Railway reforms are addressing a wide range of challenges, which includes: Improved customer experience and faster/timely delivery of cargo, ensuring customer safety, innovative financing mechanisms and ensuring financial sustainability through non-fare revenues.

Considering the fact that Railways need to spend on infrastructure to be competitive enough to be a preferred mode of transportation there are many investment opportunities that could be expected from the sector.

Conclusion / Investment Strategy

Company has established a consistent track record of financial performance and growth for years. It is expertise in undertaking all stages of project development and execution from conceptualisation to commissioning.

Also, considering the fact that railways are undergoing transformation and a lot many investment opportunities could be expected from the sector. Moreover, Government is also keen and has come front foot from past years, spending on its infrastructure and development.

RVNL has robust balance sheet with strong order backlog of Rs 77,504cr, out of which the 30,000 cr order is expected to be completed in 2-3 years. On the upper price band of Rs 19, the stock would trade at P/E of 7x for FY18 earnings, which we think is fairly priced and is available at attractive valuations amongst peers. Therefore, we recommend to SUBSCRIBE the IPO for long term benefits.

However, one has to note that huge dependence on the MoR for projects, uncertainty regards to change in gov. policy, its hill railway project which constitute a substantial portion of order book, and any delay in major long gestation projects may impact the profitability and hurt margins in future.


Review By Rudra Shares & Stock Brokers Ltd on April 1, 2019

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