PL Capital
Target: ₹275
CMP: ₹233.25
We hosted for an NDR, where the management reiterated its confidence in the medium-term growth outlook, supported by a relatively young order-book, with around two-thirds of projects (12-18 months old) entering the execution phase over FY27-28.
The company targets an order-book of ₹10,000 crore by FY27-end, with at least 80 per cent of new orders through competitive bidding, and guides for 10-20 per cent revenue growth.
PAT growth is expected to trail initially as EBITDA margins normalise from the historical 27-28 per cent to a sustainable 18-20 per cent, with a minimum 15 per cent PAT margin.
Long-term margin profile will be driven by the evolving business mix, with pure consultancy projects generating EBITDA margins of around 30 per cent, turnkey projects at about 2 per cent, and exports and leasing delivering intermediate margins at 10-15 per cent, resulting in a blended EBITDA margin of 18-20 per cent.
The company also highlighted its record export order-book of ₹2,100 crore, comprising ₹1,750 crore in rolling stock and ₹350 crore in consultancy, providing strong execution visibility through projects in Bangladesh, Mozambique, South Africa, Guyana and Nepal.
We continue to like RITES for its asset-light business model, negative working capital cycle and expected 19 per cent RoE by FY28E. We retain Buy with a target price of ₹275, along with an attractive 4-5 per cent dividend yield.