Whalesbook
Prabhudas Lilladher has issued a positive outlook for RITES, reiterating its BUY recommendation with a target price of INR 275.
The infrastructure consultancy and engineering firm posted a robust Q4FY26, with revenue climbing 24% year-on-year. While EBITDA margins stood at 22%, a slight dip from the previous quarter, the company is experiencing an upward trend in order inflows.
Record Order Book Boosts Visibility
The company concluded FY26 with a record order book amounting to approximately INR 94 billion, a significant increase from INR 89 billion in the prior year. This substantial backlog offers strong revenue visibility for the upcoming periods. Management expressed confidence in achieving double-digit revenue growth moving forward, alongside maintaining EBITDA margins of at least 20% and PAT margins around 15%.
Key Strengths and Outlook
Analysts highlighted RITES' asset-light business model, negative working capital cycle, and an anticipated Return on Equity (RoE) of approximately 19% by FY28E as crucial strengths. Prabhudas Lilladher projects a 16% revenue compound annual growth rate (CAGR) over FY26-28E, a notable acceleration from flat growth observed in FY24-26. The stock also presents an attractive dividend yield estimated between 3.5% and 4%.