Prabhudas Lilladher has issued a buy rating on RITES with a target price of ₹275 in its research report dated May 20, 2026. According to the brokerage's analysis, the stock offers an attractive dividend yield of 3.5-4% alongside strong fundamentals. The recommendation is based on the company's robust Q4FY26 performance and positive outlook for future growth.
RITES delivered impressive Q4FY26 results with revenue growing 24% year-on-year. As reported by Prabhudas Lilladher, the company's EBITDA margin stood at 22% compared to 23% in the previous quarter. However, EBITDA declined 9% year-on-year, primarily due to higher employee expenses and export-related logistics and warranty costs. Despite these headwinds, the company demonstrated strong operational momentum with improving order inflows over the past month.
The company achieved a record order book of ₹94 billion at the end of FY26, representing approximately 4 times trailing twelve-month revenue compared to ₹89 billion in the previous year. According to Prabhudas Lilladher's analysis, this substantial order book provides strong revenue visibility for future periods. Management has reiterated confidence in delivering double-digit revenue growth going forward, supported by this robust order pipeline.
Management maintained its EBITDA margin guidance of at least 20% and PAT margin of 15%, despite potential mix-related pressures. As reported by Prabhudas Lilladher, the company's asset-light business model, negative working capital cycle and expected 19% RoE by FY28E remain key positives. The brokerage projects a 16% revenue CAGR over FY26-28E, representing a significant improvement from the flat revenue growth experienced during FY24-26.
Maintaining its 25x FY28E P/E valuation, Prabhudas Lilladher retains the buy rating with the target price of ₹275. The investment thesis is supported by the company's strong order book, improving operational metrics, and attractive dividend yield. The brokerage's analysis suggests that RITES is well-positioned for sustained growth with its asset-light model and positive working capital cycle providing competitive advantages in the infrastructure and railways sector.
