According to a PL Capital report, Railway Public Sector Undertakings RVNL and RITES are likely to see double-digit revenue growth in the second quarter of financial year 2026-27 (FY-27). However, analysts see sharply divergent prospects for the two stocks, with nearly 30% upside projected for one and around 17% downside for the other. As reported by Wealth1, RVNL should fare better on growth terms in Q2 FY27, with the company's Q2FY26 profit having been down nearly 20% to ₹230 crore and showing signs of recovery in Q1FY27. The broader railway sector is also benefiting from India's ₹34,200 crore Kavach opportunity, with the addressable broad-gauge network alone spanning 81,000 route kilometres.
According to a PL Capital report, RITES Q2FY27 revenue is expected to grow by 10% on an annual basis, led by turnkey work which is low margin. As reported by Wealth1, export revenue should finally show up for the Navratna PSU after the first rake of 19 Bangladesh coaches shipped in August. Charmi Shah believes that turnkey is growing near 19%, but Q2 FY26 was a high profit base of ₹109 crore at a 24% EBITDA margin, so profit growth will likely stay in single digits.
Latest financial data reveals that RITES has experienced a quarter-on-quarter revenue decline of 29.85%, marking the lowest decline in the last 3 years. The company's total income for Q2 FY26 stood at ₹560.68 crore, compared to ₹799.21 crore in the previous quarter. EBIT margin declined to 22.57% from 22.85% in the previous quarter, while profit after tax dropped to ₹87.21 crore from ₹139.55 crore in Q1 FY26. The company maintains a market capitalization of ₹9,412.62 crore with a PE ratio of 22.6 and PB ratio of 3.45.
While PL Capital sees RVNL performing better on growth terms, the brokerage projects RVNL's margins to remain capped as the company plans a shift to a 50:50 nomination-bidding mix. According to the PL Capital report, the higher-margin overseas pipeline (guided at 15–20%) is the key lever for margin expansion. As reported by Wealth1, the Railway Board has spent 64% of its FY27 capex target by September, which supports execution and billing.
Both stocks have de-rated significantly over the past few months, with RVNL sitting near its 52-week low around ₹195, down roughly 45% in a year, yet still trading at about 45 times earnings on 4 to 5% margins. According to Wealth1, of its ₹93,000 crore order book, only about ₹40,000 crore is under active execution. RITES near ₹200 trades at about 24 times earnings with close to a 4% dividend yield and is debt-free with a record ₹9,445 crore order book. The record ₹2.93 lakh crore railway capex budget keeps the sector tailwind intact.
PL Capital maintained a 'Sell' rating for RVNL with a target price of ₹165 per share, seeing nearly 17% downside risk for the stock. RVNL share price closed 4.54% lower at ₹187 per share on BSE on Thursday. The railway PSU stock has declined 46% in one year and 61% in two years. PL Capital gave a 'Buy' rating for RITES with a target price of ₹267 per share, seeing nearly 34% upside potential in the stock. RITES share price closed 2.34% lower at ₹196.15 per share on BSE on Thursday.
