RITES - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.9

📊 Core Financials Analysis

Profitability

ROE: 15.1% and ROCE: 20.0% — strong return metrics, indicating efficient capital deployment.

EPS: ₹7.95 — decent, though not exceptional given the valuation.

PAT Qtr: ₹66.6 Cr vs ₹134 Cr — sequential decline, but YoY variation is stable (+2.76%).

Balance Sheet & Cash Flow

Debt-to-equity: 0.00 — zero debt, a major strength for financial resilience.

Dividend Yield: 2.79% — attractive for income-focused investors.

Cash flows are stable, supported by government contracts and long-term infrastructure projects.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 34.0 Overvalued vs industry PE of 20.6

P/B Ratio ~5.12 High, not fully justified by ROE

PEG Ratio −4.02 Negative PEG suggests unreliable growth expectations

Intrinsic Value ₹240–₹255 (est.) Current price ~6–12% above fair value

🧠 Business Model & Competitive Edge

Company Profile: RITES Ltd is a government-owned engineering consultancy specializing in transport infrastructure, including railways, highways, ports, and urban mobility.

Strengths

Strategic role in India’s infrastructure development under PM Gati Shakti and National Infrastructure Pipeline.

Strong execution capabilities and international project exposure.

Zero debt and consistent dividend payouts.

Challenges

Revenue and profit have declined over the past five years

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EPS and book value have weakened, suggesting margin pressure

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High valuation multiples not backed by consistent earnings growth.

📈 Technical & Sentiment Overview

RSI: 57.1 — neutral to mildly bullish.

MACD: 3.56 — positive momentum, trend continuation possible.

DMA 50 & 200: Price hovering near both — trend consolidation.

Volume: Below weekly average — cooling investor interest.

FII/DII Holding: Mixed — slight FII increase, DII marginally down.

💡 Entry Zone & Long-Term Guidance

Suggested Entry Range: ₹240–₹255 — near intrinsic value and technical support.

Holding Strategy

Suitable for long-term investors seeking exposure to India’s infrastructure boom.

Price targets for FY26 range from ₹445 to ₹652

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; long-term targets for FY30 range from ₹1,104 to ₹1,105

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Monitor order book growth, international contracts, and execution of railway modernization projects.

RITES is a low-debt, dividend-paying infrastructure play with strategic relevance, but current valuations and earnings softness suggest a staggered accumulation approach. You can explore its long-term projections on SharePrice-Target’s RITES forecast

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or review its latest dividend and financial trends on Moneycontrol’s RITES coverage

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www.moneycontrol.com

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shareprice-target.com

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