Railway PSU face-off: RITES vs RVNL - Which stock to buy ahead of Q2 results? Expectations, target price, returns
RVNL and RITES are expected to post double-digit revenue growth in Q2 FY27, but analysts see different prospects. Check outlook for these two railway PSU stocks, their Q2 expectations and target price
RITES vs RVNL: Railway Public Sector Undertakings (PSU), Rail Vikas Nigam Limited (RVNL) and RITES Limited, are likely to see double digit revenue growth in the second quarter of financial year 2026-27 (FY-27), according to a PL Capital report. . However, the brokerage sees sharply divergent prospects for the two stocks, projecting nearly 30% upside for one and around 17% downside for the other.
As the Q2 earnings season begins, let’s decode Q2 expectations for these two Railway PSU stocks.
RVNL should fare better on growth terms in the second quarter of FY27, according to Charmi Shah , Business Head, Wealth1. RVNL’s Q2FY26 profit was down nearly 20% to ₹ 230 crore and there has been some signs of recovery in Q1FY27, highlighted Shah.
The expert also added that the Railway Board has spent 64% of its FY27 capex target by September, which supports execution and billing.
RITES Q2FY27 revenue is expected to grow by 10% on an annual basis, led by turnkey work, which is low margin, as per a PL Capital report.
Charmi Shah believes that the export revenue should finally show up for the Navratna PSU after the first rake of 19 Bangladesh coaches shipped in August.
“Export revenue should finally show up after the first rake of 19 Bangladesh coaches shipped in August, and turnkey is growing near 19%. But Q2 FY26 was a high profit base, ₹ 109 crore at a 24% EBITDA margin, so profit growth will likely stay in single digits,” Shah added.
While Shah estimates RVNL to fare better on growth terms, PL Capital sees its 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.
Both stocks have de-rated significantly over the past few months, and RITES offer steadier risk-reward, but RVNL needs a few quarters of 5% plus margins to justify its valuation, according to Charmi Shah.
"Both stocks have de-rated hard. RVNL sits near its 52-week low around ₹ 195, down roughly 45% in a year, yet still trades at about 45 times earnings on 4 to 5% margins. Of its ₹ 93,000 crore order book, only about ₹ 40,000 crore is under active execution, and Ministry of Railways receivables keep cash flows lumpy. RITES near ₹ 200 trades at about 24 times earnings with close to a 4% dividend yield. It 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,” stated the expert.
PL Capital maintained a ‘Sell’ rating for RVNL with a target price of ₹ 165 per share. The brokerage sees 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 the PSU stock with a target price of ₹ 267 per share. The brokerage sees nearly 34% upside potential in the stock. RITES share price closed 2.34% lower at ₹ 196.15 per share on BSE on Thursday. The railway stock has delivered -22.67% return in one year, 34.75% return in two years and 18.56% in three years.
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