Rail Vikas Nigam Limited (RVNL) was incorporated as a 100% owned PSU of the Ministry of Railways (MoR) on 24-1-2003 with the twin objectives of raising extra-budgetary resources and implementation of projects relating to the creation and augmentation of capacity of rail infrastructure on fast track basis. RVNL became fully functional by March 2005. (Link)
RVNL is a Navratna and this allows it to make discretionary investments up to Rs 1,000 crore or 15% of its net worth without any government approval. (Link)
Stock Market Background
The Rail Vikas Nigam Ltd (RVNL) IPO was listed on April 11, 2019, with the IPO price range being ₹17-₹19 per share. (Link)
The last 5 years have been very rewarding for the company.
The stock gave multi-bagger returns of 470 percent in just 2 years and a whopping 2,500 percent in 5 years. (Ref)
As of December 31, 2024, RVNL has a strong order book of Rs 97,000 crore, focusing on railway, metro, and overseas projects.
Recent Developments in March 2025 linked to the order book include
- Rs 554 crore contract from NHAI (Ref)
- Emerging L1 bidder for ₹115-cr order from Central Railway (Ref)
Does that mean it is a ‘BUY’?
Let us delve further into this
Many retail investors have been gung ho about railway stocks(like IRFC, IRCON, RailTel, RVNL, RITES, IRCTC) since the end of 2023 considering the new orders coming in but we need to have a better look at them
Since September 2024, the RVNL stock dipped by almost 32% and now it is rising based on ‘optimism’
Let us look into the fundamentals of the RVNL Stock
1) Book Value (value of a company’s assets minus its liabilities) is less than INR 50
2) Stock is trading at INR 360+ (owing to this Price to Book Value ratio is ~8 which is very expensive)
3) Debt to Equity ~ 1 (Debt is short & long-term borrowing or loans)
4) Earning per Share(EPS) is between INR 5-7 (money made after all expenses are taken care of)
5) Marginal increase in profit from 2022, 2023 and 2024
Considering all this, how do we justify a ~40% jump in stock price value between March 2024 to March 2025?
Plan of Action Linked to RVNL Stock
As retail investors, being swayed by the ‘experts’ on TV and Newspapers is fine but we need to understand the basics about what will and what will not make us Money.
The RVNL Stock is already inflated and despite it having a huge order book we need to understand
- Infrastructure linked Project Execution takes time
- As time elapses, profit realization is not instantaneous
- The Profit growth will help in lowering the PE Ratio and Increasing the Earnings Per Share
With all the above reasons, the stock price will correct and move range bound with not much upside to retail investors even if you are holding the stock for 5-10 years.
Owing to this, invest in companies that are not expensive (reasonable PE and D/E) and have good cash flows.
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Happy Investing!
Lateral Thinking 
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