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Rail Vikas Nigam Ltd. was incorporated in 2003 by the Government of India and is engaged in the business of implementing various types of railway infrastructure projects assigned by the Ministry of Railways.
According to the company’s Quarterly Results, its net sales decreased by 1.2 per cent to ₹4,855 crore and net profit decreased by 27.2 per cent to ₹287 crore in Q2FY25 compared to Q2FY24. In its annual results, the net sales increased by 8 per cent to ₹21,889.23 crore and net sales increased by 16.5 per cent to ₹1,469.53 crore in FY24 compared to FY23. As of June 30, 2024, RVNL had a strong order book of ₹83,221 crore, focusing on railway, metro and overseas projects.
RVNL has recently experienced a 30 per cent decline from its peak, primarily due to a broader market correction. Despite this, RVNL remains a promising long-term investment. As a government-owned enterprise, it enjoys strong government support and a steady stream of projects. Its robust order book ensures a stable revenue stream, and the Indian government’s focus on infrastructure development, especially railways, positions RVNL favourably for future growth. Hence, we recommend HOLD.
Wockhardt Ltd. is a prominent global pharmaceutical company specialising in manufacturing a wide range of medications, including tablets, injections, biologics, and topical treatments. The company’s financial performance in Q1FY25 was mixed, with a net loss of ₹16 crore on net sales of ₹739 crore. However, the annual FY24 results were significantly worse, reporting a net loss of ₹472 crore on net sales of ₹2,798 crore.
The promoters’ pledge stands at 33.6 per cent, and their holding has decreased by 16.1 per cent over the past three years. While other income of ₹72 crore has boosted earnings, the company’s working capital days have improved from 45.3 to 20.7, indicating better efficiency in managing its working capital.
While the stock is currently in a bullish trend, a closer look at the fundamentals reveals underlying weaknesses. The company’s low operating profit margin and high debt burden pose significant challenges to its profitability. Given these factors, there’s a risk of a potential price reversal. Therefore, it’s advisable to consider selling the stock and investing in fundamentally stronger companies. Hence, we recommend SELL.
Bharat Heavy Electricals Ltd. (BHEL) is an integrated power plant equipment manufacturer engaged in design, engineering, manufacture, erection, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. power, transmission, industry, transportation, renewable energy, oil and gas and defence. It is the flagship engineering and manufacturing company of India owned and controlled by the Government of India.
BHEL’s revenue from operations in Q2FY25 rose significantly to ₹6,584 crore, compared to ₹5,125 crore in Q2FY24. Additionally, the company reported a notable turnaround with an EBITDA increase from ₹43 crore in Q2FY24 to ₹393 crore in Q2FY25. Its profit before tax improved, reaching ₹132 crore, contrasting with a loss of ₹197 crore in Q2FY24. BHEL has achieved substantial operational milestones, including the synchronisation of major power projects like the 660 MW Panki STPS and 800 MW Unit 2 of Yadadri TPS.
The company also commissioned the 370 MW Yelahanka gas-based combined-cycle power plant. These developments reinforce BHEL’s leadership in the power sector, particularly in executing high-capacity projects that cater to both domestic and international demands. BHEL, as a government-owned enterprise, benefits from strong government support and a steady stream of projects.
The Indian government’s emphasis on infrastructure development, particularly in the power sector, can significantly impact BHEL’s business. The company has an order book of ₹160,000 crore with ₹125,984 crore orders from the power sector, ₹30,682 crore from industry and ₹3,763 crore orders for export. Considering these factors, BHEL makes for a good investment choice for those with a long-term perspective.
Hence, we recommend HOLD.
Zen Technologies Limited is a pioneer and leader in providing world-class state-of-the-art defence training and anti-drone solutions and has a proven track record in building training systems for imparting defence training and measuring combat readiness of India’s security forces. With a dedicated research and development (recognised by the Ministry of Science and Technology, Government of India) and production facility in Hyderabad, the company has applied for over 155 patents and shipped more than 1,000 training systems around the world.
The company has experienced substantial financial growth in the recent quarters. Its net sales surged by 264 per cent to ₹241.84 crore, operating profit climbed by 264 per cent to ₹88.48 crore and net profit soared by 365 per cent to ₹63.44 crore in Q2FY25 compared to Q2FY24. In the first half of FY25, its net sales increased by 150 per cent to ₹496.46 crore, operating profit rose by 112 per cent to ₹202.94 crore, and net profit grew by 130 per cent to ₹142.93 crore compared to H1FY24.
The company successfully raised ₹1,000 crore through a qualified institutional placement (QIP). With a robust liquidity position of ₹1,103 crore, the company is well-positioned to invest strategically in research and development and potential acquisitions in simulator and electronic warfare technologies.
Zen Technologies boasts strong fundamentals and financials. Its current valuation, with a PE ratio of 83.5 times, is higher than its five-year average. However, it’s lower than its three-year average. It’s also worth noting that the promoters’ stake has recently decreased. Despite this, we remain optimistic about the company’s future growth, driven by strong demand in core markets and a robust order pipeline. If you are a long-term investor, holding on to Zen Technologies could be a strategic move. Hence, we recommend HOLD.
(Closing price as of October 08, 2024)