India’s infrastructure is booming, and it’s a big deal for companies in the construction and transport sectors. Take Rail India Technical and Economic Service, for example also known as NSE: RITES. This company is right in the middle of India’s development journey. They do everything from planning new railway lines to advising on city transport projects. Basically, they’re helping to build the backbone of the country’s growth. With India’s economy growing fast, companies like NSE:RITES are becoming more important and might just be a solid investment option.
About NSE:RITES - Company details
RITES Limited is a government-owned engineering consultancy company, specializing in the field of transport infrastructure. Established in 1974 by the Indian Government, the company initially focused on providing consultancy services in rail transport management to operators in India and abroad. Over the years, RITES has expanded its expertise to cover other modes of transport including roads, highways, airports, and urban transport.
The company is known for its comprehensive services that cover the entire spectrum of transport infrastructure. This includes design, planning, and consulting for new projects, as well as the rehabilitation and upgrading of existing infrastructure. RITES also offers project management, quality assurance, and the inspection of transport infrastructure. This multifaceted approach allows the company to cater to a diverse range of needs in the transport sector.
NSE:RITES Strengths
One of NSE:RITES’ key strengths is its skilled workforce, which comprises experts in various fields of engineering and transport planning. This allows the company to undertake complex projects and deliver solutions that are both innovative and practical. RITES is also recognized for its commitment to sustainability, seeking to implement environmentally friendly practices in its projects.
Internationally, RITES has made a significant impact by providing its services in over 55 countries across Africa, South East Asia, Middle East, and Latin America. The company’s global footprint is a testament to its expertise and ability to adapt to different geographical and cultural contexts.
Why Invest in NSE:RITES?
Diversified Portfolio: NSE:RITES’ involvement in various infrastructure projects, including railways, highways, and urban transport, diversifies its revenue streams, reducing the risk inherent in relying on a single sector.
Government Backing: As a company with significant government involvement, NSE:RITES often enjoys preferential treatment in large-scale public projects, ensuring a steady flow of opportunities.
International Footprint: Besides its domestic success, NSE: RITES has also made inroads internationally, undertaking projects in other countries. This global presence not only enhances its revenue potential but also buffers it against domestic market fluctuations.
Financial Health: With a market cap of ₹17,859.24 Cr and an enterprise value of ₹14,462.58 Cr, coupled with a zero-debt status, NSE:RITES boasts of a sound financial structure. This robust financial health makes it a less risky bet in the often volatile stock market.
Consistent Performance: The company’s consistent performance, evidenced by its steady P/E and P/B ratios, reflects investor confidence in its growth trajectory. Additionally, a strong promoter holding of 72.2% further solidifies its market position.
Attractive Dividend Yield: For those looking for regular income from their investments, NSE:RITES, with a dividend yield of 2.82%, is an attractive option. This not only provides a regular income stream but also indicates the company’s commitment to sharing profits with its shareholders.
Operational Efficiency: RITES’ high ROE and ROCE numbers are a testament to its operational efficiency and its ability to generate profits from its investments. Even amidst sales growth challenges, the company has maintained a positive profit growth trajectory.
NSE:RITES Financials
| PARTICULARS | MAR 2019 | MAR 2020 | MAR 2021 | MAR 2022 | MAR 2023 |
|---|---|---|---|---|---|
| Profit from operations | 676.72 | 822.61 | 562.35 | 674.56 | 708.54 |
| Adjustment | -116.80 | -105.14 | -80.41 | 44.15 | 7.51 |
| Changes in Assets & Liabilities | -195.74 | -250.49 | 85.93 | -251.76 | -80.34 |
| Tax Paid | -230.11 | -200.17 | -99.69 | -175.86 | -164.24 |
| Operating Cash Flow | 134.07 | 266.81 | 468.18 | 291.09 | 471.47 |
| Investing Cash Flow | 140.17 | 89.29 | 209.85 | 143.06 | 182.57 |
| Financing Cash Flow | -260.14 | -399.16 | -691.92 | -425.84 | -438.39 |
| Net Cash Flow | 14.10 | -43.06 | -13.89 | 8.31 | 215.65 |
Equity and Liabilities status of NSE:RITES
When we take a look at the financials of RITES, listed on the NSE under the ticker NSE:RITES, there’s quite a bit to unpack. From March 2019 to March 2023, RITES has shown some interesting trends in its balance sheet.
Starting with their equity and liabilities side for NSE:RITES, the Share Capital has remained pretty steady at around 240 crores from 2020 to 2023. This suggests stability in the company’s equity structure. However, the Total Reserves, which is money that’s set aside for future use, has seen some ups and downs. It went from 2,183.83 crores in March 2019 to 2,262.74 crores by March 2023. This indicates that NSE:RITES is building a bit of a cushion for the future, which is usually a good sign.
Borrowings and Liabilities of RITES
Now, let’s talk about borrowings. It’s quite impressive that RITES has had zero borrowings over these years. This means NSE:RITES isn’t relying on debt to run its business – a positive sign for financial health. Their Other Non-Current liabilities and Current liabilities have fluctuated a bit, but nothing too drastic. This shows that NSE:RITES is managing its liabilities pretty well.
NSE:RITES Assets Growth
On the assets side of NSE:RITES, the Net Block, which includes things like buildings and machinery, slightly decreased from 2019 to 2023. This might mean they are using their assets more or not investing heavily in new ones. The Capital Work-in-Progress saw a significant increase, especially in the last two years, jumping to 94.80 crores by March 2023. This indicates that NSE:RITES is investing in future projects or expanding its capabilities.
Investments and Loans
Investments and Loans & Advances have seen some changes too. Investments dipped a bit, which could mean NSE:RITES is reallocating its investment portfolio or cashing in some investments. Meanwhile, Loans & Advances increased, suggesting that NSE:RITES might be giving more loans or advances, possibly to its customers or suppliers.
Current Assets
Lastly, Current Assets have seen a steady increase, which is a good sign as it means NSE:RITES has more assets that can be quickly turned into cash.
NSE:RITES Divident History
| EX DATE | RECORD DATE | DIVIDEND% | AMOUNT Rs. | TYPE |
|---|---|---|---|---|
| 09 Feb 2024 | 09 Feb 2024 | 0 | 0 | Interim |
| 08 Nov 2023 | 08 Nov 2023 | 45 | 4.5 | Interim |
| 08 Sep 2023 | 09 Sep 2023 | 60 | 6 | Final |
| 07 Aug 2023 | 07 Aug 2023 | 37.5 | 3.75 | Interim |
| 17 Feb 2023 | 17 Feb 2023 | 60 | 6 | Interim |
NSE:RITES Conclusion
In conclusion, NSE: RITES appears to be a promising investment option in the growing infrastructure sector of India. The company’s diverse portfolio in railways, highways, and urban transport reduces the risks associated with relying on a single sector. With strong government backing and a global presence, NSE: RITES is well-positioned to benefit from India’s development initiatives and international projects.
Financially, the company demonstrates stability with zero borrowings and a focus on building reserves for the future. While there have been fluctuations in some liabilities and assets, overall, NSE: RITES seems to be managing its financial health effectively.
Investors seeking regular income will find the company’s attractive dividend yield appealing, indicating a commitment to sharing profits with shareholders. Additionally, the company’s operational efficiency and consistent performance contribute to its positive growth trajectory.
As India’s infrastructure continues to expand, companies like NSE: RITES are integral to the nation’s growth story. While there are always inherent risks in the stock market, NSE: RITES appears to be a solid and potentially rewarding investment choice in the dynamic world of infrastructure development.
