Rail Vikas Nigam Ltd. is up about 12 per cent in trading today as it emerged the L1 bidder for manufacturing and maintenance of 200 units of Vande Bharat trains.

The contract was won by JSC Metrowagonmash-Mytischi-RVNL; a Joint venture with the Russian engineering company Matrowagonmash. RVNL’s stake in this joint venture is 25 per cent, 70 per cent held by Metrowagonmash and the remaining 5 per cent by Locomotive Electronic System.

In our earlier call, we had recommended investors to “Accumulate” the RVNL stock at the level of ₹63.10. The strong order book position, decent valuation and scope for growth in railways infrastructure spending by the government underlined our positive stance on the stock.

According to reports, the total value of the contract is ₹58,000 crore for manufacturing and maintenance of 200 Vande Bharat train sets. The JV’s bid for the contract was ₹ 120 crore per train set, which is lower than the cost of the last Vande Bharat trains manufactured by ICF-Chennai at Rs 128 crore a set. The second-lowest bidder for the contract was the consortium of state-run Bharat Heavy Electricals Ltd (BHEL) and Titagarh Wagons.

Bidding process

According to the tender document, the lowest bidder (L1) will manufacture 120 trains at Latur facility. Another 80 trains contract will be awarded to L2 bidder (BHEL Titagarh Wagons) if it matches the price of L1 bidder. In case L2 bidder does not take up this contract, then L3 bidder will be given chance and if no bidder comes forward, then L1 bidder will get the entire contract.

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