RITES - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.2

📊 Long-Term Investment Analysis: RITES Ltd

RITES Ltd is a solid long-term candidate, especially for conservative investors seeking dividend stability and exposure to India’s infrastructure growth.

✅ Strengths

Zero Debt: Extremely low financial risk.

High ROCE (20.8%) and ROE (14.7%): Strong capital efficiency.

Dividend Yield of 4.38%: Attractive for income investors.

Government Ownership (72.2%): Stability and access to large-scale projects.

Strong Order Book: Over ₹6,355 Cr with international expansion (Africa, Bangladesh, Guyana).

Consistent Profitability: PAT growth from ₹100 Cr to ₹133 Cr QoQ.

⚠️ Weaknesses

High P/E (32.8) vs Industry PE (23.8): Slightly overvalued.

PEG Ratio of -3.55: Indicates earnings contraction or valuation mismatch.

Low RSI (31.8): Technically oversold, but may signal bearish sentiment.

Flat Sales Growth: -2.17% over 5 years; needs diversification beyond government contracts.

🎯 Ideal Entry Price Zone

Based on valuation, technicals, and historical support

Fair Value Estimate: ₹275–₹295

Ideal Entry Zone: ₹245–₹260

Near 200 DMA (₹263.9) and RSI oversold zone

Offers margin of safety with upside potential toward ₹445 by end of 2025

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🧭 Exit Strategy / Holding Period

If you already hold RITES

📌 Holding Period

3–5 years to benefit from dividend compounding and infrastructure tailwinds.

Long-term targets suggest potential price of ₹652 by 2026 and ₹1,190+ by 2030

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🚪 Exit Strategy

Partial Exit: If price crosses ₹445–₹475 without ROE improving above 18%.

Full Exit: If dividend payout drops below 75% or PAT declines for 2 consecutive quarters.

Monitor

Expansion into private infrastructure and exports

Order book execution and margin trends

Leadership agility and diversification beyond railways

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📉 Summary Table

Metric Value Verdict

P/E 32.8 Slightly Overvalued ⚠️

ROE 14.7% Strong ✅

ROCE 20.8% Excellent ✅

PEG Ratio -3.55 Negative ⚠️

Dividend Yield 4.38% Attractive ✅

Debt-to-Equity 0.00 Excellent ✅

Entry Price Zone ₹245–₹260 Value Buy ✅

Exit Price Trigger ₹445+ Profit Booking Zone ⚠️

Would you like a dividend reinvestment model or comparison with peers like IRCON, RVNL, or NBCC?

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shareprice-target.com

2

stockpricearchive.com

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www.indianmandarins.com

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