Rites Ltd
BSE: 500674
NSE: RITES
Stock Snapshot
 Market Cap: ₹ 12,200 Cr.
 CMP: ₹ 515
 Book Value: ₹ 108
 Face Value: ₹ 10
 Equity capital: ₹ 230 Cr.
 Promoter holding: 72.2%
 OPMs: 28.25%
 Enterprise Value: ₹ 9,086 Cr.
 ROCE Average: 31%
4th September 2023
About the Company
• Established in 1974, RITES Limited is a public sector
enterprise and a leading player in India's transport
consultancy and engineering sector, having diversified
services and geographical reach.
• The company is the only export arm of Indian Railways for
providing rolling stock overseas (other than Thailand,
Malaysia and Indonesia).
• Multidisciplinary engineering and consultancy organization
providing a diversified and comprehensive array of services
from concept to commissioning in all facets of transport
infrastructure and related technologies.
• Has a significant presence as a transport infrastructure
consultancy organization in the railway sector.
• The company also provides third-party inspection services,
quality assurance, construction supervision & project
management, operations & maintenance, leasing, export of
rolling stock and modernization of railway workshop projects,
doubling, and electrification on a turnkey basis.
• The company has undertaken projects in over 55 countries
across Asia, Africa, Latin America, South America, and the
Middle East region.
• The company has a subsidiary, REMC Ltd, which has been
mandated to handle the entire power procurement under
open access for Indian Railways, besides handling renewable
energy and energy efficiency projects. The company also has
subsidiaries in Africa and Saudi Arabia.
• The company, in FY22, has entered into several MOUs with
CSIR-Central Road Research Institute, IIT-Roorkee, SMEC
Group, and BEML Limited to explore opportunities in
infrastructure and metro systems and export of rolling stock.
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RITES is the only export arm
of Indian Railways for
providing rolling stock
overseas.
SEBI Registered RA: INH000008376
4th September 2023
Verticals:
1. Consultancy Services:
a) Techno-economic viability
b) Design Engineering
c) Project Management Consultancy
d) Quality Assurance & Inspection Services
e) Construction Supervision
2. Locomotive Leasing Services
3. Export of Locomotive, Rolling Stock and spares
4. Turnkey Construction Services
5. Power procurement & Generation
Key Subsidiary and JV
a) Railway Energy Management Company Limited
(“REMCL”)
• REMCL was incorporated on August 16, 2013 to carry out
business relating to:
a) Creation, planning, promoting, constructing, executing,
organizing, arranging and augmenting capacity in all
activities relating to energy efficiency and power
generation.
b) Undertaking any kind of projects for power generation in
the field of renewable energy resources,
c) Sale of power generated.
• RITES holds 51% shares in REMCL, balance is held by
MoR
• Provides project management and other consultancy
services for the Indian Railways with regard to setting up
of wind energy projects, solar energy projects, power
procurement and construction of transmission lines.
• It has commissioned a wind power project of capacity
26 MW in Jaisalmer, Rajasthan and has also concluded
power procurement contracts for approximately 1,175 MW
across various states in India
• National High Speed Rail Corporation Limited has
mandated REMCL to undertake techno – economic
viability studies and related surveys of power sourcing
arrangements.
Page 2
 b) SAIL-RITES Bengal Wagon Industry Private Limited –JV (50%
each):

Involved in the business of:

a) Trading, selling, import, export, manufacturing of
railway wagons including high end specialized
wagons, wagon prototypes, fabricated
components/parts of railway vehicles
b) Its ancillary units including to repair, manufacturing
items of locomotives, machineries, equipment and
other related components.
RITES holds 51% shares in
REMCL, balance is held by
MoR

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4th September 2023
 Investment Thesis
a) Diversified Sector Portfolio:
RITES provides third-party
inspection services, quality
assurance, construction
supervision & project
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4th September 2023
RITES is the only company having diversified services and
geographical reach in transport Infrastructure field under
one roof.
Provides a comprehensive range of consultancy service
offerings, primarily in the transport infrastructure space
Leases locomotives to domestic and foreign clients and also
provides maintenance services
Company’s domestic locomotive leasing business has grown
from a single loco in 2009 to 44 locomotives.
Exports railway locomotives, passenger coaches, wagons
equipment and spare parts
Undertakes turnkey construction projects on engineering,
procurement and construction basis, with or without equity
participation in such projects
They also provide various after –sales services for rolling
stock including the supply of spare parts and maintenance
personnel training.
Diversified Portfolio Advantages:
• Access additional business from existing clients
• Address the requirements of a larger base of
potential new clients
• Develop long term relations with clients
• Access sectors with growth potential as per changing
macroeconomic trends
• Expand operations in the sectors in which the
company already has presence
Page 4
 b) Large Order Book

• RITES is an export arm of Indian railways that providing

rolling stock overseas

• Majority of order book (~75%) consists of Central/State

Government orders
Consultancy Projects:
• General engineering and design consultancy services for the
Nagpur Metro
• Pune Metro Project and the Ahmedabad Metro Project
• Safety audit for sections of National Highways of aggregate
RITES is the only company
length approximating 1,238 kilometres in eight states in India
having diversified services
• Design of the Rail-cum-Road Bogibeel Bridge, near
and geographical reach in
Dibrugarh, Assam, India
the transport Infrastructure
• Project Management Consultancy for Passenger Terminal at
field under one roof.
Srinagar Airport
Turnkey:
• Doubling of railway line from Gooty to Dharmavaram for the
South Central Railway in India on EPC basis
• Railway electrification works for the Ringas – Jaipur –
Sawaimadhopur section for the North Western Railways and
Vijaypur-Maksi section for West Central Railways
Leasing:
• Wet leasing of 5 nos. of WDS-6 Locomotives for Dhamra
Port Company Limited

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4th September 2023
 c) Diversified Client base: Long-standing history of business
relationships and collaboration with Marquee clientele

RITES is an export arm

of Indian railways that
providing rolling stock
d) Preferred organization for the Government of India:
overseas
• Involved in and have contributed to the development of
transport infrastructure in India for the last 44 years.
• Nominated organisation of the Indian Railways
for the export of railway and other related components.
• Long standing relationship with the Government
enables RITES to get projects from time to time on
nomination/single tender basis.
• Advantages:
a) Key position in the growth plans of the government of
India with respect to infrastructure and energy space
b) Nominated organisation for inspection of various
materials and equipment purchased by the Indian
Railways
c) RITES to get several assignments on nomination/single
tender basis from various government ministries,
organizations and departments including the Indian
Railways

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4th September 2023
 e) A beneficiary of NITI Aayog’s ‘New India Vision –
2022’ plan

f) Strong in-house team

• In-house team of expert engineers specializing in civil,

The majority of order
book (~75%) consists of
Central/State
mechanical, metallurgy, chemical, electrical, signal and
telecom engineering, information technology, finance and
general management
• Have a pool of 1,400 skilled engineers/ professionals of
executive on permanent roll.
• Also source requisite manpower from the Indian Railways
and other government ministries and departments, both
on deputation and permanent basis, according to
requirements
• Senior Management with an Average Experience of About
33 Years

Government orders
g) Augment the capacity of existing railway
infrastructure

• Increase the speed of infrastructure creation from the

present 7 kms/day to 19 kms/day
• Achieve 100% electrification of broad gauge track from
the current 50% level
• Increase the average speed of freight and mail/express
trains to 50
o kms/hr (from current 25 kms/hr) and 80 kms/hr (from
current 60 kms/hr) respectively
• Enhance service delivery, achieving 95% on-time arrivals
• Achieve freight load of 1.9 billion tonnes and an improved
modal share of 40% of freight movement from the
current level of 33%
• Increase the share of non-fare revenues in total revenue
to 20%
• To achieve the above objectives within a stipulated time
frame, Indian Railways is expected to increase its net
capital expenditure over the next 3 years. RITES is
expected to be a significant beneficiary of this railway
infrastructure push.

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4th September 2023
 h) Top Priority Area for GoI: Ramping up Investments in Indian
Railways:
RITES to get several
assignments on
nomination/single tender
basis from various
government ministries,
organizations and
departments including the
Indian Railways
i)
4th September 2023
• India’s Growing GDP driving stride of Urbanization
• 40% of India’s population will be living in urban areas by
2030
• The continuing pattern of urbanization driving investments
in infrastructure development with higher private
participation
• GoI has started focusing on infrastructure investments in a
big manner – 5% of GDP spent on Infrastructure during the
Xth Plan is expected to increase to ~8% in the XIIth Plan
• GoI has made commendable progress in initiating
infrastructure creation and is able to achieve 90% of its
planned investments over the last 3 years
• Investments made during the last 3 years is almost 75% of
the total investments made in the railways during the past
decade (FY04 –FY14)
• Roads and Highway Sector Today Dominates the
Government’s Planned Expenditure Amongst Other Key
Infrastructure Segments
• GOI aims to boost public and private investment in roads
sector through various schemes such as NHDP, PMGSY,
Bharat Mala scheme,etc. along with introducing business-
friendly strategies that will balance profitability with
effective project execution
GoI’s Commitments for Road Infrastructure:
• BJP government has committed to construct 60,000 kms of
national highways in the next 5 years by 2024 (most of
which will be under Bharatmala project)
• We expecting that ~40% of it would be through the EPC
route (approx. 24,000 kms), while the rest would be
through the HAM route.
• RITES is primarily present in the EPC contracts space and
therefore, momentum in EPC road projects is expected to
benefit the company.
• The management has confirmed that they are comfortable
in taking HAM projects in the future given their cash-rich
balance sheet and ability to raise capital.
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 j) New Orders

It caters to both domestic as well as international markets and receive

order on tender as well as nomination basis.

The order book position stood healthy at Rs.5,207.00 Crores. Total

unexecuted order book is proposed to be executed in next 2-3 years
which provides revenue visibility over the medium term.

Out of total tenders around 70% are based on competitive bidding

and remaining 30% on nomination basis.
By virtue of being a public
IVR believes that RL will continue to secure a significant portion of
sector undertaking, RITES
such tenders under the bidding system by its long-standing experience
has established business
in executing railway and other related projects.
relationships with several
central and state The company secured around 50 projects in the first half of FY22.
government ministries
It secured its highest-ever order in August 2021 for railway track
works from the Ministry of Railways.

Other major orders include DPR & PMC for dual gauge conversion of
the railway line between Bogra and Sirjganj for Bangladesh Railways
(worth 62.9 crores), higher schedule repair of Locomotives for SAIL
Bhilai plant(24.7 crores), and detailed Project Report for 2 landing of
the road from Meluri, Nagaland to Singhat, Manipur (19.1 crore).

By virtue of being a public sector undertaking, RITES has established

business relationships with several central and state government
ministries, departments, corporations and public sector undertakings
(PSU) which helps it in getting projects on nomination basis.

RITES is also the only export arm of Indian Railways for

providing rolling stock overseas. The Company is led by a well-
qualified management team which has long standing experience in
RITES/ other PSU’s.

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4th September 2023
 Key Risks

• Slower than expected ramp-up in railway

infrastructure: With liquidity tightening in the banking and
NBFC space, investments in railways through the PPP model
(Public Private Partnership) could hit a roadblock.
• Due to land acquisition issues, infrastructure
bottleneck could slow down new lines addition in
railways: Land acquisition is the major issue for laying new
railway lines. Most of the railway projects are stuck due to a
delay in land clearances.
• Business cyclicality: Infrastructure is cyclical as it depends
entirely on the country's investment momentum and
economic performance. India’s economic growth is slowing
RITES is expected to be the
down and there could be a chance of weakness for a couple
biggest expenditure beneficiary
of more years due to both micro and macro reasons. A long-
in all three infrastructure
term slowdown could impact the business performance of
segments – Rail, Highways and
RITES.
City Infra.

In a nutshell

RITES is expected to be the biggest expenditure beneficiary in

all three infrastructure segments – Rail, Highways and City
Infra.

The recent change in revenue mix with the ramp-up of the

turnkey business has been a revenue booster for the company
and the momentum is expected to continue in the coming years
making Rites a promising addition to the portfolio between Rs.
480-520.

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4th September 2023
 Financial Snapshot

Operating profit percentage

to sales will remain constant
despite the correction in
Lantus prices.

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4th September 2023
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4th September 2023