RVNL Shares Surge 5% Following ₹3,622 Crore BSNL Order

Shares of Rail Vikas Nigam Ltd (RVNL) saw a significant jump of over 5% in early trading on January 16 after the company revealed it had received a Letter of Acceptance (LoA) from Bharat Sanchar Nigam Ltd (BSNL). This development marks a major milestone for RVNL, highlighting its growing prominence in infrastructure development projects.

On January 16, RVNL's share price was over 4% higher at ₹388, eventually climbing to an intraday high of ₹406 by around 9:30 am IST. However, the stock later trimmed some of its gains, trading at approximately ₹396 (up 6.4%) by 10:12 am IST.

Details of the Order

The project involves the creation, upgradation, operation, and maintenance of the middle-mile network for Bharat Net, India’s ambitious initiative aimed at connecting rural areas with high-speed broadband. Bharat Net is a flagship project under the Digital India campaign, designed to improve digital connectivity and bridge the digital divide across the country. The middle-mile network will serve as the backbone for providing connectivity between core nodes and end users in villages and remote areas.

The construction phase is expected to take three years to complete. Following this, RVNL will be responsible for a 10-year maintenance contract. For the first five years, the maintenance cost is set at 5.5% per annum of the capital expenditure (CapEx). This will increase to 6.5% per annum for the remaining five years, ensuring sustained service quality throughout the contract duration.

The order is valued at an impressive ₹3,622.14 crore, underscoring the scale and importance of the project. RVNL will act as the lead member of the consortium tasked with executing the project, with HFCL and ATS serving as consortium members. The collaboration between these entities is expected to leverage their collective expertise to deliver on the project’s requirements efficiently.

Impact on RVNL’s Stock

RVNL’s stock performance reflected investor confidence in the announcement. On January 16, the shares opened over 4% higher at ₹388, driven by optimism around the large order. By 9:30 am, the stock had reached an intraday high of ₹406, marking a surge of more than 9%. While the stock pared some of its gains later in the morning, it was still trading strongly at around ₹396, reflecting a 6.4% increase by 10:12 am.

Strategic Importance

This order is a testament to RVNL’s capabilities in handling large-scale infrastructure projects. As a key player in the consortium, RVNL’s involvement signals the government’s trust in the company’s ability to deliver critical connectivity infrastructure. Bharat Net is a pivotal component of the government’s effort to boost economic activity in rural areas, enhance access to digital services, and support education, healthcare, and e-governance initiatives.

Future Prospects

The successful execution of this project is expected to strengthen RVNL’s portfolio, positioning it as a strong contender for future government and private sector projects. With infrastructure and digital connectivity being a priority for India’s development, RVNL stands to benefit from the sustained investment in these sectors. Investors and market analysts will closely watch the company’s progress in completing this critical project within the stipulated timeframe.

This development also highlights the increasing demand for public-private partnerships in large-scale infrastructure projects. As RVNL, HFCL, and ATS collaborate, their joint expertise and resources will likely create a benchmark for similar future initiatives.