RVNL Stock CRASHES 2.2% After Q2 Results: Profits Dip, Cash Flow Turns NEGATIVE! Is THIS the End of the Rally?

Rail Vikas Nigam Ltd (RVNL) faced investor scrutiny as its stock dropped 2.2% to ₹310.65 on Wednesday, November 12, following the release of its September quarter financial results. The company reported a mixed performance for the quarter.

Revenue was the sole metric to register a year-on-year increase. However, key profitability indicators such as Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) and EBITDA margins saw a decline when compared to the corresponding quarter of the previous year. Net profit also decreased year-on-year.

A significant concern for investors is the negative operating cash flow. RVNL's operating cash flow stood at a negative ₹1,254 crore by the end of the first half of the financial year 2025 (H1FY25). This contrasts sharply with the positive ₹1,878 crore recorded in March 2025 and ₹1,755 crore in the same period last year, indicating a strain on the company's liquidity.

While the quarter-on-quarter (QoQ) performance showed some improvement, with revenue surpassing expectations compared to the previous quarter, it missed the Bloomberg Consensus estimates for the current quarter.

The stock's decline is part of a broader trend, with shares down 6% over the past month and a substantial 26% year-on-year. RVNL has also fallen nearly 50% from its all-time high of ₹647 reached in 2023.

Impact: This news is likely to negatively impact investor sentiment towards RVNL, potentially leading to further selling pressure in the short term. The decline in profitability and negative cash flow raise concerns about the company's financial health and future growth prospects. Investors will be closely watching management's commentary on addressing these challenges. Rating: 6/10

Difficult Terms: EBITDA: Earnings Before Interest, Tax, Depreciation, and Amortisation. It is a measure of a company's operating performance, excluding non-operating expenses like interest and taxes, and non-cash expenses like depreciation and amortisation. EBITDA margins: EBITDA divided by revenue, expressed as a percentage. It indicates how efficiently a company generates profit from its core operations relative to its sales. Operating cash flow: The cash generated from a company's normal business operations over a period of time. Positive operating cash flow indicates a healthy business, while negative cash flow can signal financial distress. Bloomberg Consensus: An average estimate of financial results (like earnings per share or revenue) compiled from forecasts made by financial analysts who cover a particular company, as tracked by Bloomberg. Year-on-year (YoY): A comparison of financial metrics from one period to the same period in the previous year (e.g., Q2 2025 vs. Q2 2024). Quarter-on-quarter (QoQ): A comparison of financial metrics from one financial quarter to the previous financial quarter (e.g., Q2 2025 vs. Q1 2025). All-time high (ATH): The highest price at which a stock has ever traded.