Rail Vikas Nigam (RVNL IN) – Q3FY26 Result Update – Rich valuation amid weak execution – SELL
Published on 08 Feb 2026
Rail Vikas Nigam (RVNL) delivered a muted Q3FY26, with revenue growth of +3% YoY and margin compression reflecting rising share of lower margin, competitively bid projects versus legacy railway nomination works. Despite EBITDA decline of 8% YoY, PAT at +4% YoY was largely supported by lower finance costs. The management has projected FY26E as a transition year, with topline growth of only 1–2% YoY and profitability expected to remain under pressure. The order book stood at ~Rs870bn (c.4.5x FY26E revenue) provides long-term revenue visibility, supported by diversification across railways, roads, metros, electrical, telecom and digital infrastructure. However, order inflows have broadly matched execution over the past 2 years, resulting in a largely stagnant order book. We forecast a book-to-bill ratio of ~1.0x over FY26–28E, suggesting limited headroom for a sharp acceleration in execution, notwithstanding a strong bidding pipeline and multiple MoUs, where conversion visibility remains a key monitorable. At the current market price, RVNL is trading at a stretched valuation of ~54x FY28E EPS, with only low single-digit EPS growth expected over FY26E–28E. We have a SELL rating with an SOTP-based target price of Rs 183 per share. Key upside catalysts include a meaningful improvement in EBITDA margins and sustained order inflows of around Rs 300 bn per annum.
