Prabhudas Lilladher has issued a buy rating on RITES with a target price of ₹275 in its research report dated July 01, 2026. According to the brokerage's analysis, the company demonstrates strong fundamentals with an attractive 4-5.0% dividend yield and maintains a 25x FY28E P/E valuation multiple. The stock is currently trading at ₹233.25, providing a potential upside to the target price. The brokerage continues to highlight the company's asset-light business model, negative working capital cycle and expected 19% RoE by FY28E as key investment drivers.
During a recent NDR with management, RITES reiterated confidence in its medium-term growth outlook, supported by a relatively young order book with around two-thirds of projects (12-18 months old) entering the execution phase over FY27-28. The company has set an ambitious target of ₹10,000 crore order book by FY27-end, with at least 80% of new orders expected through competitive bidding. Management guides for 10-20% revenue growth while PAT growth is expected to trail initially as EBITDA margins normalize from historical 27-28% to a sustainable 18-20% range, with a minimum 15% PAT margin target. The company's long-term margin profile will be driven by an evolving business mix, with pure consultancy projects generating EBITDA margins of around 30%, turnkey projects at about 2%, and exports and leasing delivering intermediate margins at 10-15%, resulting in a blended EBITDA margin of 18-20%.
RITES has achieved a record export order book of ₹2,100 crore, comprising ₹1,750 crore in rolling stock and ₹350 crore in consultancy. This provides strong execution visibility through projects in Bangladesh, Mozambique, South Africa, Guyana and Nepal. The company's international presence demonstrates its diversified revenue streams and global market reach, with recent trading data showing positive momentum in international markets.
Prabhudas Lilladher models a 16% revenue CAGR over FY26-28E for RITES. The brokerage continues to highlight the company's asset-light business model and negative working capital cycle, which contribute to its operational efficiency. The analysis projects an expected ~19% RoE by FY28E, reflecting the company's strong return on equity potential. Recent financial data shows the company's consolidated net sales at ₹768.26 crore in March 2026, representing a 24.83% year-on-year growth.
The brokerage maintains its positive stance on RITES based on its asset-light business model, negative working capital cycle and expected 19% RoE by FY28E. According to Prabhudas Lilladher's research, the company's diversified order book, strong export presence, and projected growth trajectory support the bullish investment recommendation with the ₹275 target price. The company's record export order book of ₹2,100 crore and strong execution visibility through international projects further strengthen the investment case, with the stock currently trading at ₹233.25 offering potential upside to the target price.
