This railway related stock has zoomed over 90% thus far in December

Shares of Oriental Rail Infrastructure were locked at upper circuit for the eight straight day on the BSE backed by heavy volumes.

Shares of Oriental Rail Infrastructure (ORIL) were locked at the upper circuit for the eight straight day, up 5 per cent at Rs 235.35 on the BSE on Tuesday at 11:44 AM, on the back of heavy volumes.

Thus far in the month of December, the market price of the company has zoomed 91 per cent from a level of Rs 123. In past six months, it has skyrocketed 442 per cent from Rs 43.38 and 602 per cent from its 52-week low price of Rs 33.50 touched on May 4.

The average trading volumes at the counter more-than doubled today. Around 1.07 million equity shares representing 2 per cent of total equity of Oriental Rail changed hands on the BSE. There were pending buy orders for 277,926 shares on the exchange, data shows.

ORIL manufactures seat & berths, densified thermal bonded blocks (DTBB), silicon foam blocks, acosonic board, artificial leather/rexene, compreg boards & allied products which are used in railway coaches for over a number of years.

On December 21, the board of directors of ORIL approved fund raising of up to Rs 215 crore through the issue of equity shares and convertible warrants at price of Rs 169 per share. The board approved allotment of 7.5 million warrants convertible into equity shares to promoter Wazeera S Mithiborwala.

The board also approved allotment of 5.06 million equity shares at price of Rs 169 per share to investors including Mukul Mahavir Agrawal (3.4 million) and others (1.66 million).

Oriental Foundry Private Limited (OFPL), a wholly-owned subsidiary of ORIL, is engaged into manufacturing of bogies, coupler and wagons for Indian railways and many other industries. OFPL has two separate units for manufacturing of its product line. OFPL Unit I manufacture Bogie and OFPL Unit II manufacture wagon. OFPL unit-I has manufacturing capacity of 1,660 MT per month while, unit-II has manufacturing capacity of 2,400 wagons per annum.

Meanwhile, all the products developed by ORIL for Indian Railways are approved by the Research Designs Standards Organisation (RDSO) which is the sole vendor approving body for the Railways. The products are also RITES certified, which is the sole inspecting authority for ensuring quality and clearance of all products supplied to Indian Railways.

The company manufactures several products consumed not just by the Indian Railways but many other industries as well such as Seat & Berth, Densified Thermal Bonded Block (DTBB), Compreg Board & Allied Products, ORVIN, Recorn, Coated Upholstery Fabric, Furniture & Parts, Plywood and Phenolic Resin & Hardener, Rubber floor.

The ambitious plan of the Government has also triggered the demand for Railway Seat & Berth, modern hi-tech wagons, Bogies and Coupler where the Company has already established a strong presence.

The company’s consolidated order book of Rs 1,379 crore indicating a strong combined order book to sales ratio of 4.21x; thus, providing revenue visibility in medium to long term. However, timely executions of orders without cost overrun remain critical from credit perspective and a key monitorable, said CARE Ratings.

Majority of orders are directly from various subsidiaries of Indian Railways. Balance order book is mainly from companies like Braithwaite & Company Limited, Jindal Rail Infrastructure Limited, Acme India, Hindustan Fibre Glass Works, etc. which in-turn caters to the demand of Indian Railways. Heavy reliance on Indian Railways links the company’s growth prospects to the demand from the same, the rating agency said.