RITES Limited .....(A giant in making)

Dear members

Glad to post new stock analysis from Industrial machinery sector.

Fundamentals are Good, should be in portfolio for long term, I will add slowly 40-50 stocks every month for 12 month in portfolio.

RITES LTD.
Cmp :- 251

(SCRIPT CODE :- RITES)

BSE CODE :- 541556

COMPANY PROFILE :- 

• RITES Ltd., a Government of India Enterprise was established in 1974, under the aegis of Indian Railways.

• RITES Ltd, incorporated in 1974-75, is a 100% government-owned company with a Miniratna (Category - I) Schedule ‘A’ Public Sector Enterprise status.  

• RITES Ltd., an ISO 9001:2015 company, is a multi-disciplinary consultancy organization in the fields of transport, infrastructure and related technologies. 

• The company has an experience spanning 44 years and has undertaken projects in over 55 countries including Asia, Africa, Latin America, South America and Middle East regions. 

• It is the only company having diversified services and extensive geographical reach all under one roof. 

• It provides a comprehensive array of services under a single roof and believes n transfer of technology to client organizations. In overseas projects, RITES actively pursues and develops cooperative links with local consultants / firms, as means of maximum utilization of local resources and as an effective instrument of sharing its expertise.

• The company has a strong order book of Rs 55.2bn (5520 Cr.) till Q1FY19,

KEY FUNDAMENTALS :- 

STOCK INFO
Market Cap	4940 Cr
P/E	12.38
52 W High/Low	326/ 185
Face Value	10
EPS	19
Book Value	113
Price/Book Industry PE Dividend	2.17 18.87 55%

SHARE HOLDING PATTERN
Promotors	87.40 %
MF	5.32 %
DII FII	2.12 % 1.07 %
Public/NII	4.03 %
TOTAL	100%

KEY IMPORTANT FEATURES OF THE COMPANY :-

• ‘RITES’ stands for ‘Rail India Technical and Economic Service’.

• Rites Limited is in the consultancy work of Railway, infra, urban transports, Roads and highways, Inland waterways, Airports, Ports,  Big institutional Buildings, Renewable energy, Metro rail. 

• Rites also in the field of Leasing, export, maintenance and rehabilitation of locomotives and rolling stock;

• RITES is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia).

• In India, company’s clients include various central and state government ministries, departments, instrumental as well as local government bodies and public-sector undertakings. Of the total current order book, 77% orders are from Central & State Governments.  

• The company has enhanced its domain knowledge and technical expertise by participating in consortiums with several consulting partners including SYSTRA, EGIS Rail S.A, GEOCONSULT ZT GmbH amongst others from countries such as France, Japan, Austria, U.S.A, Germany and Denmark. 

• In the past three years Rites has also been nominated by the Indian Railways to undertake turnkey execution of railway projects in new line laying, doubling and gauge conversion. 

• The company is already working on key metro projects such Patna, Varanasi, and Agra, and expects order inflows to continue. 

• Company is right now in following sectors from small scale to Turnkey projects. 

• AIRPORTS
• ARCHITECTURE & PLANNING
• BRIDGE & TUNNEL ENGINEERING
• CONSTRUCTION PROJECT MANAGEMENT
• ENVIRONMENTAL ENGG./URBAN ENGG.
• ELECTRICAL ENGINEERING
• EXPOTECH
• FINANCIAL MANAGEMENT
• GEOTECHNOLOGY
• HIGHWAYS
• INDUSTRIAL ENGINEERING
• MATERIALS SYSTEM MANAGEMENT
• RAILWAY EQUIPMENT SERVICES

• PORT & WATER RESOURCES
• PRIVATISATION & CONCESSIONS, IT
• QUALITY ASSURANCE
• RAILWAY ELECTRIFICATION
• RAILWAYS
• ROLLING STOCK DESIGN
• ROPEWAYS
• SIGNAL & TELECOM
• SURVEYS
• TRAINING
• URBAN TRANSPORT & UI
• RAILWAY INFRASTRUCTURE

IMPORTANT CLIENTS :- 

• In India, Rites clients include various central and state government ministries, departments, instrumentalities as well as local government bodies and public sector undertakings. 

• These include Indian Railways, NTPC, Dedicated Freight Corridor Corporation of India Limited, High Speed Rail Corporation of India Limited, Public Works Department, DMRC, Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, Hindustan Petroleum Corporation Limited, Bharat Coking Coal Limited, Metro Link Express for Gandhinagar and Ahmedabad (MEGA) Company Limited, Indian Port Rail Corporation Limited, Airports Authority of India, among others.

• Rites also has several private sector corporations as its clients whch includw L&T Metro Rail (Hyderabad) Limited, Kanti Bijlee Utpadan Nigam Limited (KBUNL), Cimmco Limited, Titagrah Wagons Limited, Snowmex Engineers Limited, Unity Infraprojects Limited, Rajdeep Buildcon Private Limited, Mahalsa Constructions Private Limited, Marymatha Constructions Limited, AFCON Infrastructure Limited, INCAP, ARK Services, MNEC Consultants Private Limited, Indian Geotechnical Services Limited, Geokno India Private Limited and NATRIP Implementation Society among others.

RITES & IT'S JOINT VENTURES/SUBSIDIARIES :-

➤ SAIL‐RITES Bengal Wagon Industry Private Ltd (SAIL‐RITES) is a 50:50 joint venture between RITES and SAIL. It manufactures railway wagons from a facility located within the premises of SAIL Growth Works, Kulti, West Bengal. It has entered into an assured off‐take agreement with the MoR (Ministry of Railways) for procuring 1,200 wagons and rehabilitation of a minimum of 300 wagons annually. 

➤ BNV Gujarat Rail Private Ltd (BNV) is joint venture between RITES (26%), Shapoorji Pallonji Road (67.5%), and PCM Cement (6.5%). It is formed for the implementation of the Bhuj‐Naliya‐Vayor Rail‐Connectivity Project in Gujarat on a BOOT (build‐own‐operate‐transfer) basis for a concession period of 30 years. 

➤ Railway Energy Management Company Limited (REMCL)  The Ministry of New and Renewable Energy, Government of India seeks to achieve the target of renewable energy generation of 175 GW by 2022, with 100 GW being contributed by generation from solar power. For the Indian Railways, the Ministry has set as 20% of the total consumption to be through renewable energy. To help Indian Railways meet its stipulated target, the Indian Railways and RITES have set up a company, namely Railway Energy Management Company Limited (REMCL), with the objective of synergizing the technical resource base. RITES holds 51% of issued and paid-up equity share capital of REMCL.

http://ritesltd.com/upload/misc/Balancesheet/RECML-AR-2018.pdf 

➤ Rites (Afrika) (Proprietary) Limited 

RITES FINANCIAL STUDY :- 

By Analysing Company's past 4 years result , Company is giving best result every year. 

Revenue is increasing, other income increasing. EBITDA increasing continuously.

Net Profit stood 282 Cr. in March 2016. While in FY18 company posted 337 Cr. of Net Profit. 

We are expecting company can reach 500 Cr.  Net PAT till 2020

RITES TECHNICAL STUDY :- 

• Rites have given reversal in daily chart.

• Given symmetrical triangle breakout on daily chart, RSI breakout seen. 

• Currently trading above 50 DMA, Waiting to cross 100 and 150 DMA around 254.

• STOCK TIGERS short term target around 275,285 and Long term stock can again see 320 levels.

RATIONALE :- 

• Strong Promoter Group. Promoter Holding is also Good. Company has good consistent profit growth of over last 4 years. Company has a good return on equity (ROE) track record: 3 Years ROE 15.55%

• Strong Financials. Consistent Profit Making. 

• Strong Fundamentals.

• Rites ltd. have Strong business background.

• RITES have a strong global presence across 55 nations. Their first international project was in 1975 with Syrian Railways and as on today order book consists of projects from ten countries. The company have largely worked in Asia, Africa, Latin America, South America and Middle East regions.  

• In future expansion of technical consultancy, Rites is looking at expanding design and project management consultancy services for road safety audits, bridge condition surveys, bridge maintenance management systems and rehabilitation, with focus on other urban transport and transport infrastructure sectors including metro rail projects and high-speed corridor projects.

• Company has strong order book and technical expertise. Strong clients list.

• Undervalued compared to its fundamental strength. 

• RITES is the largest transportation infrastructure consultant in country with expertise in railway and metro rail infrastructure. Moving further it plans to intensify into international markets with exports of locomotives and other turnkey construction projects. 

NEGATIVE:- 

• Company is mainly dependent of Railway contracts. Majority of the work is from Railway Ministry. So any adverse policy may affect company's profitability and order book. 

• Company is n the type of consultancy work of Turnkey projects, which can take time to complete. 

VERDICT:- 

• RITES Ltd. is a debt free and asset light company. 

• Its growth in revenue and profitability has been consistent over the last few years. 

• The company’s order book is strong giving decent revenue visibility.

• It has been paying out dividends consistently since past many years. 

• Valuation seems to be attractive. 

• It has strong client base and mainly caters to the Indian Railways. 

• Expertise in Consultancy work from Port, railway, Road, Infra, Metro, Building, Renewable energy to what not.

• Rites have strong Global Presence in 55 nations.

• STOCK TIGERS believe this stock should be in your core portfolio , without seeing it's price till 5 years. One year target is 320. Within 2 years stock can show 400 levels. 

• We will add this stock in every dip whenever stock correct due to market sentiment.

#MULTIBAGGER

Happy Investing

==========================================================================

Disclaimer:- 

This is a personal blog and presents entirely personal views on stock market for only education purpose. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. 

 Before buying any stock take advice from certified person

NOTE : THE ABOVE IS NOT A RESEARCH REPORT NOR A RECOMMENDATION  BUT INFORMATION AS AVAILABLE ON PUBLIC DOMAIN. 

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”