Equity ideas

RITES Limited - Investment Idea

Capital expenditure has been at a low pace since past few years. To improve capex and job creation, government will look up to one of the most promising sector - Railways.

For every project of Railways, as required, RITES offers infrastructure, engineering and consultancy services including maintenance and rehabilitation of rolling stock, railway equipment and modernization of railway workshops, and rehabilitation, operation and maintenance of railway systems.

Therefore, it is not wrong to assume that the growth of railways in India, will be growth of RITES too.
RITES is not limited to Railways, it has been connected to several airport projects and export services as well.

Currently it is traded at Rs.280.
Dividend for FY 18-19 was Rs.12.75.

With an expected growth rate of 35% and order booking of Rs.8000 Cr by the management, expected PE of 15 as regard to similar companies and corporate tax rate cuts till 25%, the prospects of the company are even better. 6% Dividend yield is expected in FY 19-20.

Not only the company is debt free but also has a rich cash balance of Rs.1300 Cr.

With a low PEG Ratio, good growth prospects and diverse services, RITES has potential to be a key player in the coming years.

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