RITES Limited

Industrials — Engineering & Construction · NSE

₹208.00−₹6.27 (−2.93%)

DalalBaazaar Score

61 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Low

Driven by small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with modest growth. Nothing on this snapshot stands out as an immediate concern — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Constructive picture on fundamentals. Profitability, leverage and growth metrics are broadly healthy on this snapshot. That said, valuation should still be checked against direct sector peers (not just the generic P/E bands used here) before treating this as a buy signal.

Understanding the Business

Company site ↗

The 60-second version of RITES Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

RITES Limited, together with its subsidiaries, operates as an engineering consultancy company in the field of railways, highways, airports, ports, ropeways, urban transport, and inland waterways.

IndustryEngineering & Construction

SectorIndustrials

Employees1,765

Annual revenue₹2,405 Cr

How does it make money?

Turns over ₹2,405 Cr a year. Of every ₹100 of sales, about ₹17 reaches shareholders as profit, with ₹29 left at the operating level before interest, tax and depreciation. Each of its 1,765 employees supports ₹1.36 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin28.6%

Net margin17.1%

Revenue / employee₹1.36 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

ADANI PORT & SEZ LTDP/E 29.9x · ROE 14.1%

SIEMENS LTDP/E 88.8x · ROE 10.5%

What is its competitive advantage?Some evidence

ROCE of 18.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE18.7%

ROE15.3%

Peer median ROE14.1%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 17.6% and earnings to grow about 17.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+17.6%

Est. earnings growth+17.0%

Analysts3

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -7% while net margin moved -18% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-7%

Margin effect-18%

DalalBaazaar Score

61/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 2.5% a year
✗ Profit has declined at 8.9% a year

Quality vs. Valuation

Company Quality

59/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

61/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

24.0x

3Y Median

28.5x

40 monthly readings · mean 27.6x · range 20.0x–36.4x

Sector Median

30.1x

median of 3 sector peers

🟢Current valuation is approximately 16% below its 3y median of 28.5x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 20% below the peer median of 30.1x.

vs. its own history

Fair

28.5x median over 40 months · -16%

vs. sector peers

Cheap

30.1x median of 3 peers · -20%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

24.0x

P/B

3.73x

EV/EBITDA

13.8x

PEG

2.86

Dividend Yield

5.29%

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.24x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 33.6% to 28.6% over 3 years.
Return on equity is falling
ROE has dropped from 20.8% to 15.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 25.8% to 18.7% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.0 points, from 33.6% to 28.6%.
🟡Profit is decliningFinancial
Net profit is down 24% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.7% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Cheaper than its peers
It trades 20% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹265 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 33.6% to 28.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 20.8% to 15.3%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 27%✓ 28.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹265 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 16%✓ 18.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 28.5x✓ 24.0x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

11 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 5 neutral · 0 weak

Market Cap

₹9,997 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

24.0x

Fair

Fairly valued against the generic band

P/B Ratio

3.73x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹8.67

Profitable

Profitable on a per-share basis

ROE

15.3%

Strong

Strong capital efficiency

ROCE

18.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.24x

Low

Conservative leverage

Revenue Growth (YoY)

8.7%

Modest

Modest growth

Profit Growth (YoY)

8.4%

Modest

Slow profit growth

Dividend Yield

5.29%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹265 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹208

P/E (Forward)

18.9x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

18.4%

Good

Healthy core-business profitability

Net Margin

17.0%

Good

Strong bottom-line conversion

Current Ratio

1.67

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.26

Defensive

Steadier than the market

52W Range Position

39%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

202.7 / 211.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

58.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,598 Cr	₹2,444 Cr	₹2,184 Cr	₹2,405 Cr	-2.5%
EBITDA	₹872 Cr	₹746 Cr	₹615 Cr	₹687 Cr	-7.7%
EBITDA Margin	33.6%	30.5%	28.2%	28.6%	—
PAT (Net Profit)	₹542 Cr	₹455 Cr	₹385 Cr	₹410 Cr	-8.9%
EPS	₹11.28	₹9.48	₹8.01	₹8.54	-8.9%
ROE	20.8%	17.5%	14.6%	15.3%	—
ROCE	25.8%	23.0%	19.4%	18.7%	—
Total Debt	₹5 Cr	₹8 Cr	₹9 Cr	₹7 Cr	+6.7%
Free Cash Flow	₹424 Cr	₹294 Cr	₹504 Cr	₹265 Cr	-14.5%

🔴 Revenue has shrunk at 2.5% a year over 3 years.

🔴 EBITDA has shrunk at 7.7% a year over 3 years.

🔴 EBITDA Margin has fallen from 33.6% to 28.6% over 3 years (-5.0 pts).

🔴 PAT (Net Profit) has shrunk at 8.9% a year over 3 years.

🔴 EPS has shrunk at 8.9% a year over 3 years.

🔴 ROE has fallen from 20.8% to 15.3% over 3 years (-5.5 pts).

🔴 ROCE has fallen from 25.8% to 18.7% over 3 years (-7.1 pts).

🔴 Total Debt has grown at 6.7% a year over 3 years.

🔴 Free Cash Flow has shrunk at 14.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹5,926 Cr

Total Liabilities

₹3,132 Cr

Total Debt

₹7 Cr

Cash & Equivalents

₹557 Cr

Operating Cash Flow

₹327 Cr

Capex

-₹62 Cr

Shareholding (proxy)

Institutional Holding

10.3%

Insider Holding

72.2%

Corporate Actions

Dividend Rate

₹11

Ex-Dividend Date

18 Sept 2026

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹278

+33.7% vs CMP

Target Range

₹267 – ₹289

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

3 mixed3 general

RITES Share Price

Upstox, 15 Oct

RITES shares on an uptrend, up 12% in just 5 sessions - Can the stock rise further? Experts decode

Livemint, 15 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

RITES Forecast — Price Target — Prediction for 2027

TradingView, 26 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

RITES (RITES) Share/Stock Price Live, NSE

TechGraph, 08 Oct

Why Is RITES Stock Up 16% Today? Rs 175 Crore Order Explained

NiftyTrader, 01 Jul

Rites Ltd. Share Price rises with Capital Goods context

Univest, 30 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong14.3/20

🟢Financial HealthStrong17.8/20

🔴GrowthWeak2.4/20

🟡ProfitabilityModerate9.5/15

🟢ValuationAttractive9.9/15

🟢RiskLow6.7/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 27%28.6%
✓Free cash flow remains positive₹265 Cr
✓Debt / EBITDA stays below 2x0.0x
✓ROCE stays above 16%18.7%
✓Valuation vs its own median of 28.5x24.0x today