On BSE, RailTel stock climbed over 10% on Tuesday by hitting a new 52-week high of ₹137.70 apiece. However, the stock ended at ₹135.90 apiece up by 8.63%. Its market cap is around ₹4,361.55 crore.
RailTel shares in a month have climbed by nearly 29% on Dalal Street. Meanwhile, due to the current strong uptick, the shares have now given at least 37.9% gains in three months. The stock was less than ₹100 on August 16, 2022. Year-to-date, the stock has surged by nearly 18% on D-Street.
In the second quarter, RailTel's consolidated net profit was around ₹55.24 crore -- more than doubled from ₹25.85 crore in Q1FY23. However, Q2 PAT dipped from ₹67.50 crore in the second quarter of FY22. Revenue from operations was robust at ₹428.71 crore in Q2FY23 --- increasing from ₹358.49 crore in Q2FY22 and ₹376.85 crore in Q1FY23.
Should you buy RailTel shares?
In its report, ICICI Securities Research Analysts Sanjesh Jain and Akash Kumar highlighted that Railtel's EBITDA was down 8.6% YoY (up 50% QoQ on normalisation of its telecom services) to Rs1 billion as project services margin continued to be depressed (EBIT margin: 3.4%).
However, the analysts note also said that Railtel shared strong guidance: 1) revenue/ EBITDA growth of 20% in FY23 and beyond; 2) project business revenue of Rs10 billion in FY23 (Rs15 billion possible in FY24 with a pick-up in execution); order book is healthy at Rs45 billion (reassessment has led to a decline from Rs58 billion from Q1FY23); 3) addition of new services especially consultancy, as well as monetisation of certain assets, will provide an upside; and 4) Kavach and allied services will likely lend significant delta to EPS.
The note added, "We increase our EPS estimates by 3-11% over FY23EFY24E, and target price to Rs160 (from Rs120), as we raise the P/E multiple to 18x FY24E EPS (earlier: 17x). Maintain BUY. Risks: Slower revenue growth particularly in project services, and lower margins in telecom services."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
