Shares of Rail Vikas Nigam Ltd. (RVNL) have been on an upward trajectory, with the stock gaining over 2% last Tuesday, following its inclusion in the MSCI India Index as part of the MSCI global standard index’s August review. This strategic inclusion has triggered positive market sentiment, leading to increased interest in the state-run railway company.
The stock had a stellar performance on Monday, ending 11% higher, marking its best single-day gain in over a month. This surge comes after a recent dip, where RVNL’s shares had declined by 20% from their peak of ₹647, reached on July 15, 2024.
Market analysts at IIFL Alternatives predict significant inflows exceeding $180 million into RVNL shares due to this inclusion, while Nuvama Alternative and Quantitative Research estimate even higher inflows of $219 million during the rebalancing on August 30.
Adding to the positive momentum, RVNL, along with other railway PSUs, experienced a surge of up to 11% on Monday. This rally followed the approval of eight projects by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Friday. The Ministry of Railways’ projects, with a total estimated cost of ₹24,657 crore, are expected to be completed by the financial year 2030-2031.
Despite the recent rally, RVNL’s shares had been on a downward trend, largely due to disappointing financial results reported last week. The company saw a 27% decline in revenue, with its Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) nearly halving. Margins also fell to 4.5% from 6.3% in the previous year.
As of the latest trading session, RVNL shares are up 2% at ₹587.6. The stock has seen an impressive rise of 222% so far in 2024 and a remarkable 369% over the past 12 months, reflecting strong investor confidence despite recent challenges. The upcoming MSCI rebalancing is expected to further influence the stock’s performance as institutional investors adjust their portfolios to include RVNL.
