Which stock can deliver better returns in the long term:
RVNL vs IRCON?
RVNL and IRCON International are experiencing soaring success as railway stocks surge in the market.
In the last three months, RVNL’s stock has gained an impressive 88%, while IRCON International has recorded a remarkable 56% increase.
Investors actively seek these companies as sought-after players in the railway sector.
RVNL operates as the executing arm of Indian Railways, while IRCON International specializes in transport and railway infrastructure construction.
Both stocks have sustained a formidable uptrend for a year, capturing investor interest and positioning them as excellent options for long-term investment.
RVNL shares have zoomed 300% in a year, while IRCON International shares have risen by 143% during the same period. In the past two and three years, RVNL has turned into a multi-bagger with surges of 284% and 546%, respectively.
The upward trend continues for both railway stocks in 2023, also.
RVNL has gained 80% this year, while IRCON International’s stock has risen by 42%.
Also Read: IRFC @ 52 Week High: Buy, Sell, Hold: What Analysts Say?
Expert Insights
Fundamental Analysis
V.L.A. Ambala, a SEBI Registered Research Analyst at Stock Market Today (SMT),
acknowledges the potential in both RVNL and IRCON International as they are linked to core businesses in the railway sector.
Also Read: Defense stocks having ‘Buy’ Recommendations with an upside potential of up to 25%
IRCON International:
- PE Ratio: IRCON’s PE ratio stands at around 11, which is relatively low compared to the sectoral PE ratio of 26. This suggests that the stock is attractively valued based on its earnings per share.
- Beta: With a beta of around 1.03, IRCON International indicates higher volatility compared to the market, which implies that its stock price may be more sensitive to market fluctuations.
- Dividends: IRCON has a track record of delivering high dividends compared to its sector’s dividend yield, which can be appealing to income-seeking investors.
- Key Ratios:
- Market Cap ₹ 9,062 Cr.
- Current Price ₹ 96.4
- High / Low ₹ 101 / 38.6
- Stock P/E 11.8
- Book Value ₹ 55.4
- Dividend Yield 2.59 %
- Face Value ₹ 2.00
- Industry PE 25.9
- PEG Ratio 0.88
- Return over 1year141 %
- ROCE 15.8 %
- ROE 15.5 %
- OPM 6.78 %
- Debt ₹ 1,505 Cr.
- Debt to equity 0.29
- Profit Var 3Yrs 18.1 %
- Qtr Profit Var 6.07 %
- Qtr Sales Var 28.0 %
- Free Cash Flow ₹ -266 Cr.
Also Read: “RVNL shares rally for Four straight sessions, hit 52-week high; Here’s why?”
RVNL:
- PE Ratio: RVNL’s PE ratio is 18.17, which is higher than its sectoral PE ratio of 15.29. This indicates that the stock may be relatively more expensive compared to its earnings per share in the sector.
- Monopoly: RVNL has a monopoly in its business, which can be advantageous in terms of controlling market share and pricing power.
- Dividends: RVNL offers a dividend yield of 1.72, which is higher than the sector’s dividend yield of 1.14%, potentially making it an attractive option for income investors.
- Key Ratios:
- Market Cap ₹ 25,708 Cr.
- Current Price ₹ 123
- High / Low ₹ 147 / 30.6
- Stock P/E 18.1
- Industry PE 15.2
- PEG Ratio 0.89
- Return over 1year 298 %
- Book Value ₹ 35.1
- Dividend Yield 1.72 %
- ROCE 17.8 %
- ROE 20.7 %
- OPM 6.15 %
- Debt ₹ 6,441 Cr.
- Debt to equity 0.88
- Profit Var 3Yrs 23.4 %
- Qtr Profit Var-5.00 %
- Qtr Sales Var-11.2 %
- Free Cash Flow ₹ -4,137 Cr.
Abhijeet from Tips2trades believes that
IRCON International is a better stock fundamentally, with a lower debt-equity ratio and steady profit growth.
A close above Rs 90 could lead to a target of Rs 98 and Rs 102 in the near term. Support for IRCON International will be at Rs 81.7.
Gaurav Bissa, VP of InCred Equities,
highlights the similarity in structure between RVNL and IRCON International.
Both stocks have witnessed significant breakouts and strong volumes.
He predicts a target of Rs 185 for RVNL and Rs 120 for IRCON International in the long term.
Vaishali Parekh, Vice President – Technical Research at Prabhudas Lilladher,
sees both stocks well placed and with upside potential.
IRCON had resistance near Rs 89, and a move past this level could trigger further upward momentum, targeting Rs 100 and Rs 127 levels.
RVNL, after a decent rally, has support near Rs 111, and a breach above the previous peak at Rs 145 could lead to further targets at Rs 182 and Rs 198.
Aamar Deo Singh, Head Advisory at Angel One,
suggests that RVNL has outperformed IRCON International in 2023, with over 80% growth compared to the latter’s 40%.
Investors may consider booking partial profits as the short-term upside potential seems to have been reached.
Related Read: 25% in 10 days: Why RailTel Rallied So Much- Buy, Sell, hold?
Technical Analysis: Relative Strength and Moving Averages
The relative strength index (RSI) for RVNL stands at 56.9, indicating balanced trading, and the stock is trading above the 20-day, 50-day, 100-day, and 200-day moving averages but below the 5-day and 10-day moving averages.
For IRCON International, the RSI stands at 56.4, also indicating balanced trading and the stock has a one-year beta of 1.1, suggesting higher volatility.
Conclusion:
Notably, Both RVNL and IRCON International are considered fundamentally strong and stable. Moreover, they present promising long-term investment opportunities.
RVNL’s monopoly in its business and higher dividend yield may appeal to some investors, while IRCON’s attractively low PE ratio and history of high dividends may be enticing for others.
Ultimately, investors should carefully assess their own risk tolerance, investment goals, and outlook for the railway sector before making a decision on which stock may deliver better returns in the future.
DISCLAIMER:
We are not SEBI-registered advisors or analysts. All the views shared in this article and all the content shared on aceink.com are only for learning and educational purposes. Any part of the article or any information on Aceink.com should not be interpreted or considered as investment advice. None of the opinions, views, or content posted on Aceink.com constitutes investment advice, as we are not SEBI-registered advisors or analysts.
Aceink.com or any person associated with this website accepts no liability or responsibility for any direct, indirect, implied, or any other consequential damages arising directly or indirectly due to any action taken based on the information provided on this website. Please conduct your own research, and we suggest seeking investment advice only from a SEBI-registered investment advisor.
The views expressed by investment experts, broking houses, news and media houses, rating agencies, etc., are their own and not those of Aceink.com or its management. Aceink.com advises users to consult a SEBI-registered investment advisor before making any decisions.
——————
“Riding High – Key Drivers Behind the Momentum of this small-cap stock” This small-cap stock is poised to…Read More