Prabhudas Lilladher has issued a buy rating on RITES with a target price of ₹267 in its research report dated August 05, 2026. According to the brokerage's analysis, the stock offers an attractive dividend yield of 4-5% alongside strong fundamentals. The recommendation is based on the company's asset-light business model, negative working capital cycle, and expected ~19% RoE by FY28E.
RITES delivered an in-line Q1FY27 performance with revenue growing 9% YoY, as reported by Prabhudas Lilladher. However, EBITDA margin moderated to 21.5% from 23.0% YoY, primarily due to a higher share of low-margin turnkey projects. The company's export revenue remained muted at ₹10 million as rake-based revenue recognition shifted to Q2FY27, with the first Bangladesh rake scheduled for dispatch shortly.
The company's order book reached a record ₹94.5 billion, representing approximately 4x TTM revenue, according to Prabhudas Lilladher's report. This sequential growth was supported by ₹6.7 billion of order inflows during the quarter, despite ongoing execution challenges. Management remains on track to achieve its ₹100 billion order book target in FY27E and has reiterated guidance of double-digit revenue growth.
Prabhudas Lilladher expects revenue to clock a 16% CAGR over FY26-28E, representing a sharp improvement from flattish growth over FY24-26. The brokerage maintains its 25x FY28E P/E multiple and retains the buy rating. However, factoring in the impact of the 4th Pay Commission revision effective January 2027, the firm has cut its FY28E EPS by 3%.
