RITES Ltd: A Compelling Turnaround Story Backed by a Robust Order Book
After a period of sustained pressure on the stock markets, RITES Ltd, the prominent PSU engineering and consultancy firm, is now being viewed as a strong rebound candidate by analysts. Despite shedding 11% over the past year and 5% in the last three months, the prevailing sentiment suggests the downside is limited and a recovery is on the horizon.
Brokerage Bullishness: 'Pick of the Week' with a Clear Target
Axis Securities has turned decidedly constructive on RITES, naming it the 'Pick of the Week'. The brokerage has issued a 'Buy' recommendation with a target price of ₹271 per share. This implies a potential 10% upside from the current trading level of around ₹247.25, with a time horizon of 6 to 9 months.
The stock is currently trading nearly 22% below its 52-week high of ₹316.15, recorded in June 2025, which analysts believe presents an attractive entry point for investors.
Three Pillars Supporting RITES' Growth Trajectory
Axis Securities' optimism is rooted in three key structural positives that are expected to drive medium-term growth.
1. A Robust and High-Quality Order Book
The company's financial visibility is secured by a total order book of ₹9,090 crore, which provides revenue coverage for the next 2 to 2.5 years. A significant highlight is that 34% of this order book comes from the high-margin consultancy segment, which underpins the company's profitability. The second quarter of FY26 saw a notable pickup, with RITES securing over 150 new orders worth ₹851 crore.
2. Export Momentum Accelerates
The export vertical is emerging as a major growth driver. RITES has secured export orders worth ₹1,541 crore, and the contribution of export revenue has been consistently improving since Q2FY26. Backed by this strong momentum, Axis Securities expects RITES' overall revenue to register a 23% CAGR over FY25–FY27E.
3. Turnkey Projects: The Future Catalyst
Turnkey projects constitute a substantial 46% of the total order book. While revenue from this segment has been subdued as most projects are in early stages, Axis Securities anticipates a meaningful revenue pick-up starting from Q4FY26. As these projects transition from design to physical implementation, they are expected to become a significant catalyst for the company's top line.
Strong Fundamentals and Quarterly Performance
RITES continues to demonstrate operational strength. For Q2 FY26, the company reported a 34% year-on-year jump in consolidated net profit to ₹98 crore. Its revenue from operations saw a modest increase to ₹549 crore. Operationally, EBITDA surged 22% to ₹130 crore, with the EBITDA margin expanding impressively to 23.64% from 19.67% in the same quarter last year.
The company also declared a second interim dividend of ₹2 per share, reinforcing its shareholder-friendly policy. With a robust balance sheet, strong return ratios, and exposure to rising infrastructure spending, RITES is well-placed for sustainable long-term growth.
