1. Company and its industry
2. Management and its business model
3. Fundamentals
4. Growth
5. Valuation
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Company
Overview - RVNL was established in 2003. RVNL is public sector company. The company is a wholly owned government company, as a project executing agency working for and on behalf of (MOR).
Business of RVNL - The company is in the business of executing all types of railway project including new lines, doubling, gauge conversion, railway electrification, metro project, workshops, major bridge etc.
Rating of RVNL -
1. RVNL has been rated Excellent for the 9 successive years by department of public enterprises.
2. RVNL has been ranked 1st amongst the railway PSE’s for 4 times in last 5 years.
3. Company received rating of 97.18/100 by department of public enterprises.
Share-holding of promoter -
Share-holding of FII -
Share holdings of DII -
Subsidiary and joint venture of company -
1. Employees - 585
2. Salary - 190 crore
3. Company spend 2.8% of average net profit
Industry
1. India has 4th largest railway network in the world with a total network of 68,442 route (km).
2. There are 22,000 trains runs daily. In which 13,313 passengers train that can carry 2.3 crore passengers and around 8,000 freight trains that can carry around 3.3 crore tonnes of freight per day.
3. Every day our railway moves people equal to the population of Australia.
4. 1111.14 km of projects are ready in 2019-2020, where’s it only 733 km in 2018-2019. There was an jump of 51.59% in projects.
5. 1959.83 km of project length are made in 2019-2020, where’s it was only 999.94 in 2018-2019. There was an jump of 95.99% in project length.
6. In present 7km/ day is the speed of infra creation which was 19 km/ day by 2022-2023.
Management
Management talk -
1. Strength -
* Company gets projects by ministry of Railways.
* Company has refined its tendering process by the application multi package tender, which resulting in faster decisions making and saving in overall costs.
* Company has introduced large scale mechanisation in all aspects of construction to achieve high quality output.
* HSRC, a subsidiary of RVNL is poised to provide consultancy services and also for implementation of high speed corridors in the time to come.
2. Weakness -
* RVNL is dependent on the ministry of Railways for funding of project.
* RVNL does not have the freedom to plan execution of projects and has follow priorities set by railway.
* Changes in approved plans by the railway, during execution of project, result in delays.
3. Opportunities -
* RVNL has successfully constructed major workshops for Indian railway in fast track mode, So in future Company also get project of large buildings, factories to own ship etc.
* RVNL’s growth as a Major provider of a variety of rail infrastructure, there is an opportunity of securing rail infrastructure projects overseas.
* With the work of executing of Kolkata metro project. Company also get more metro projects in future.
* HSRC, which can provide opportunities for implementation of high speed corridors in the country and upgradation of some route for semi high speed operation as planned by (MOR). Eg Chennai-Bengaluru- Mysore (130km).
4. Threats -
* The shortage of technical manpower, with required experience in the rail sector.
* Land acquisition issues require to be resolved expeditiously so that the progress of project is not hampered.
* Projects are adversely affected due to poor law.
* Stoppage of work by MOR on nomination basis and withdrawal of power of sanction of estimate.
5. Concerns -
* The poor pace of supply of rails from SAIL has been a matter of concern for the last two years.
* Delays in land acquisition.
6. Outlook -
* The long term outlook of company remains positive.
* Company also expand it operations with the help of its subsidiary, such as export of cranes, construction of metro and also with HSRC.
7. Mission - To create state of the art rail transport infrastructure to meet the growing demand.
8. Vision - To emerge as the most efficient provider of rail infrastructure.
* Return on equity ( ROE) -
* Return on capital employed ( ROCE) -
* Return on assets ( ROA) - 8.69
Business model
Break up of project
Break up of Assets
Revenue break up of joint venture
Project composition
Geographical break up
Country wise revenue composition
Other information -
1. RVNL received an ₹12326 crore for project expenditure from ministry of railway in 2019-2020.
2. RVNL have 183 projects in the end of 2020, in which 92 are completed & 91 under implementation & 5 project yet to be sanctioned.
3. ₹ 9.18 crore of flats are under construction.
Loan from IRFC - During the year, an additional amount of `1407.96 crore was received as borrowings from IRFC. With this, the total amount received from IRFC is `5735.39 crore. The principal and interest on the borrowings from IRFC are repaid by Ministry of Railways (MoR) as a pass through entry in the books of RVNL. During the year an amount of `265.74 crore was paid to IRFC on this account, leaving an outstanding loan balance of `3987.94 crore.
Major clients - Indian railway, state government & public sector companies.
Fundamental
1.Market cap - 5,869 crore
2.Balance sheet -
4. Debt to equity- 0.88
5. Interest coverage ratio - 10.92
6. P&L statement -
7. Cash flow to profit ratio ( 5 years average) = -0.5
8. Cash & cash equivalents (2020) - 273.80 crore
9. Debtor days -
10. Contingent Assets - 860.83 crore
Case pending on court (assets) - 499.04 crore
11. Contingent liabilities - 2745.67 crore
Case pending on court (liability) - 575.51 crore
* Some other important data -
1. Cash and cash equivalents - 273.80 crore
2. Tangible assets - 16.56 crore
3. Right of use assets - 265 crore
4. Investment in joint venture - 1584.93 crore
5. Total financial assets - 4615.65 crore
6. Total financial liabilities - 6667.59 crore
7. Lease receivables (current) - 265.74 crore
8. Lease receivable ( non-current) - 1386.13 crore
9. Unbilled revenue - 1579.65 crore
Growth
* physical performance -
* Project delivery in last 5 years -
* Project Expenditure -
* Sales Growth -
* Profit Growth -
* Share price Growth -
Valuation
* PEG Ratio - 0.39
* Price to book value ( P.B Ratio) - 1.08
* Intrinsic value formula ( Benjamin graham formula ) - ₹ 241
# intrinsic value formula:-(2*G + 8.5) * EPS
Where G stand for growth(5years)
EPS stand for earn per share
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