RITES Share Rallies nearly 11% After Bagging $36-mn South Africa Locomotive Order

Mumbai, July 7: Shares of RITES Ltd (RITES) rallied as much as 10.91% to Rs 239.74 on Tuesday on news that the state-run rail consultancy had bagged a $35.82-million order from South Africa’s Volantis Asset Finance (Pty) Ltd. Trading in the counter is still underway.

Shares of RITES began the day at Rs 226.30, also representing its intraday low, and rose gradually throughout the day to reach Rs 240.78, its intraday high for the day. Its previous closing price was Rs 216.15. The stock’s volume weighted average price (VWAP) was Rs 233.80, indicating strong buying throughout the day.

Buyers vastly outnumbered sellers of RITES stock on Tuesday, with 78.13% of all traded shares or 65,61,307 shares placed on the bid while the sell-side recorded volume of 18,36,215 shares or just 21.87% of the total, a ratio of nearly 4:1 in favour of buyers. The top bid for the stock was between Rs 239.67 and Rs 239.71, while the top ask was between Rs 239.80 and Rs 239.89 as RITES extended gains through Tuesday morning.

Weekly Trend

The weekly graph for RITES shows the stock rising quickly from around Rs 205.00 at the beginning of last week on June 30 to around Rs 231.00 by July 01’s close, before correcting to around Rs 223.00 on July 02 and falling to about Rs 211.00 where it mostly hovered throughout the remainder of last week. The stock is now trading significantly higher than its highest price point from last week following Tuesday’s strong gains.

RITES (RITES) Secures $35.82-Million Order From South Africa’s Volantis Asset Finance

RITES said it has received an order from Volantis Asset Finance (Pty) Ltd, South Africa, for the supply and commissioning of 4,000 HP Cape Gauge diesel-electric locomotives worth $35.82 million, or around Rs 341 crore. The contract will be executed over a period of 20 months and will be added to the company’s order book once the contract is signed by both parties following due diligence, the company said.

RITES further clarified that neither the company’s promoters nor its promoter group has any interest in the awarding entity, and that the transaction does not involve related-party dealings. The company is the sole export arm of Indian Railways for rolling stock overseas, and this fresh win adds to an export order book that stood at Rs 1,755 crore as of March 31, accounting for close to a fifth of RITES’s total order book of over Rs 9,400 crore. RITES has previously supplied locomotives to countries including Mozambique, Bangladesh, and Sri Lanka, and separately secured a $35.2 million order from another South African buyer, Ndalama Capital, in December.

The scale and geography of the Volantis order appear to be the key trigger behind Tuesday’s sharp rally, with investors likely rewarding the added visibility it gives to the company’s overseas pipeline at a time when RITES, a Navratna central public sector enterprise under the Ministry of Railways, has been leaning more heavily on exports and turnkey projects to diversify away from domestic consultancy work as Indian Railways’ own electrification programme nears completion.

Source: NSE quote data; company filing;