RITES Has Received an Order Worth Rs.454 Crore From the Karnataka Mining Environment Restoration Corporation

RITES Ltd, the engineering consultancy giant, saw its shares rise today, on October 23, 2024, after announcing that a previously awarded Project Management Consultancy (PMC) contract from the Karnataka Mining Environment Restoration Corporation (KMERC) has been upgraded to a turnkey contract. This project, worth Rs.453.99 crore (excluding GST), involves constructing two railway private freight terminals (PFTs) at Dharmapura and Susheel Nagar in the Ballari District.

Turnkey vs. PMC: What’s the Difference?

Unlike a PMC contract, where the contractor takes care of parts of the project, a turnkey contract puts full responsibility on the contractor for the entire project—from design to completion. In this case, RITES will handle all aspects of the PFT construction, delivering the fully operational terminals within 30 months of signing the agreement or receiving the site for construction.

RITES on a Streak

RITES has been busy on multiple fronts lately. Earlier this month, the company landed a $4.28 million (Rs.35.87 crore) contract from Tsiko Africa Logistics for the supply and commissioning of a diesel-electric locomotive. The firm was also the lowest bidder for a consultancy contract with the Uttar Pradesh State Bridge Corporation, valued at Rs.60.03 crore, to supervise civil works and ensure safety.

Financials & Market Performance 

While the company continues to bag new contracts, its financial performance has seen a dip. In Q1FY25, RITES reported a consolidated net profit of Rs.90.4 crore, down 24.4% compared to Rs.119.6 crore in Q1FY24. Revenue from operations also dropped 10.8% year-on-year to Rs.485.8 crore. Despite these figures, the company declared an interim dividend of Rs.2.50 per share for FY25.

The shares are trading at Rs.294.50 up 1.53%. However, despite the announcement of the Rs.454 crore contract, the stock had closed down 3.4% at Rs.289.95 yesterday, on October 22. Over the past year, the stock has gained over 26%

Conclusion: RITES continues to expand its portfolio with new contracts, both in India and abroad. Though the financials may have taken a slight hit in recent quarters, the company’s consistent order flow could offer growth opportunities in the coming months.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.