RITES is a wholly owned Government Company, a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise. It is a leading player in the transport consultancy and engineering sector in India and the only company having diversified services and geographical reach in this field under one roof. RITES has an experience spanning 43 years and has undertaken projects in over 55 countries including Asia, Africa, Latin America, South America and Middle East regions.
Outlook & valuation: In terms of valuations, pre-issue PE works out to 12x of annualized FY18 EPS `17 (at the upper end of the issue price band), which is reasonably priced considering (a) 3.5x of order book with execution capability and experienced management, (b) maintaining the RoE level in the range of 17- 18%, (c) diversified client base and (d) increasing opportunity of revenue from Railways due to new investment in electrification and infrastructure. Given that the RITES is a preferred consultant of Indian Railways along with other government authorities with exposure in international operation and fair valuation of issue, we recommend SUBSCRIBE to issue
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