RVNL Share / BSNL's support also did not help, RVNL's vehicle again derailed

RVNL Share: Rail Vikas Nigam Limited (RVNL) and Bharat Sanchar Nigam Limited (BSNL) entered into a significant partnership for a major project, which was expected to provide support to RVNL’s declining stock. However, contrary to market expectations, this partnership did not have a positive impact on RVNL's stock prices.

Fluctuations in RVNL Shares

On February 21, RVNL's share price reached a high of ₹393, but by noon, it recorded a decline of 2.25% and started trading at ₹372.95. This drop became a concern for investors, especially when the market had high hopes for positive outcomes from this partnership.

Major Project with BSNL

RVNL signed a Project Implementation Agency (PIA) agreement with HFCL Limited and Aaryan Telecom Solutions Private Limited to collaborate with BSNL. Under this agreement, the project involves the development, upgradation, operation, and maintenance of BharatNet’s middle-mile network. The primary objective of this project is to enhance broadband connectivity across the country.

Contract Value and Terms

The RVNL consortium won this project by placing the lowest bid, with a total value of ₹13,253 crore. The contract includes:

• Completion of construction work within three years.
• RVNL will be responsible for maintenance for the next ten years.
• For the first five years, the maintenance fee is set at 5.5% of the annual capital expenditure, while for the next five years, it will be 6.5%.

Performance of RVNL Shares

RVNL had previously witnessed a positive surge in its share price when it secured another contract worth ₹555 crore. Additionally, on February 19, RVNL's shares showed a slight increase.

• In the past five days, RVNL's shares saw a 7% increase.
• On the morning of February 21, the stock rose by 2%, but later declined by 3.5%.
• In the last six months, RVNL investors have suffered a 34% loss.
• Since the beginning of 2024, RVNL's stock has fallen more than 13%.

Message for Investors

While this partnership with BSNL is considered a significant achievement for RVNL, its immediate impact on the stock market has not been positive. Market fluctuations are natural, and investors need to adopt a long-term perspective. RVNL’s future performance will depend on the execution of this project and the company's financial standing.

Conclusion

The saying "A drowning man clutches at a straw" does not seem to apply to RVNL’s current situation. Although this ₹13,253 crore contract with BSNL is an effort to steer the company in a new direction, market response remains uncertain. It remains to be seen how much benefit RVNL's stock will gain from this partnership in the coming days.