RailTel Corp shares soar 45% in just one week. Is there more upside?

Shares of RailTel Corp, a miniratna CPSE under the Ministry of Railways, were the top gainers during the past week, rising as much as 45%. In this surge, the stock also scaled a fresh 52-week high of Rs 246.

In the AGM, held last week, the management said the company showed strong performance in the fiscal year 2022-23 despite challenging market conditions.

RailTel's total income has grown by 27% to Rs 2,002 crore in the fiscal 2023, reaching a new milestone in the company's journey.


So far this year, the company's stock soared nearly 90% and in the last year, it has delivered multibagger returns to investors with a nearly 140% gain.
Analysts say the structure of the counter looks lucrative, as it is trading above all its important moving averages.

"The counter has given a triangle pattern breakout of the 190 level and also broke its all-time high of the 190 level, which was a multi-month breakout stock. MACD (moving average convergence divergence) is supporting the current strength, whereas the momentum indicator RSI (relative strength index) is also positively poised," said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.

Gour further said there is an immediate hurdle at Rs 250 and above, it is expected to move towards Rs 280 plus. However, on the downside, Rs 225 is a strong demand zone during any correction.

The stock is also benefiting the government's ambitious plans for the infra and railways sector, which is positive for the company in the long term.

The railway ministry plans to seek Cabinet approval for a Rs 5.25 lakh crore investment program during fiscal years 2024-31 to improve rail connectivity to mining areas, cement plants, and consumption points, based on the PM Gati Shakti National Master Plan.

RailTel is an ICT provider and one of the largest neutral telecom infrastructure providers in the country owning a Pan-India optic fiber network. The OFC network covers important towns & cities of the country and several rural areas.

"The stock is outperforming the benchmark indices. At present, it is looking extended in price action. Hence, one can hold the stock at CMP with a stop loss of Rs 209 for a target Rs 299–320 levels in a couple of weeks," said Mileen Vasudeo, Sr Technical Analyst, Arihant Capital.

In the recent first quarter, RailTel's revenue from operations fell to Rs 141 crore, while profit after tax too dipped to Rs 13 crore from Rs 22.8 crore a year ago.

The company's order book stood at Rs 4,400-4,500 crore, as of July 2023. For FY24, the company has guided for 18-19% growth in EBITDA margins and 25% growth as far as revenue is concerned.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)