Buy Rites, target price Rs 405: Axis Securities

Axis Securities has buy call on Rites with a target price of Rs 405. The current market price of Rites Ltd. is Rs 339.85.

Rites, incorporated in the year 1974, is a Mid Cap company (having a market cap of Rs 8074.14 Crore) operating in Services sector.

Rites key Products/Revenue Segments include Sale of Products, Consultancy Income, Turnkey Project, Other Services, Lease Rentals, Export Incentives and Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 684.30 Crore, up 7.47 % from last quarter Total Income of Rs 636.71 Crore and down -13.25 % from last year same quarter Total Income of Rs 788.85 Crore. Company has reported net profit after tax of Rs 140.37 Crore in latest quarter.

The company’s top management includes Mr.Rahul Mithal, Mr.Dineshananda Goswam, Mr.Laxman Tammanna Tapashi, Mr.Godawari Mishra, Mr.R K Mangla, Mr.Sandeep Jain, Mr.Vinay Srivastava, Mr.Bibhu Prasad Nayak, Mr.Anil Vij, Mr.Likha Togu. Company has J C Bhalla & Co. as its auditors. As on 30-06-2022, the company has a total of 24 Crore shares outstanding.

Investment Rationale
The brokerage continues to like the company’s execution capability and its order book position, clean balance sheet and high dividend payout and expect Revenues/EBITDA/APAT to grow at a CAGR of 18%/18%/14% respectively over FY21-24E. The stock is currently trading at 13x & 12x FY23E/FY24E earnings.

Promoter/FII Holdings
Promoters held 72.2 per cent stake in the company as of 30-Jun-2022, while FIIs owned 1.48 per cent, DIIs 17.26 per cent.