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RailTel Corp shares under pressure as shrinking margin continues to worry investors

RailTel share price: The stock faced selling pressure on Wednesday after Investec lowered its earnings per share estimates for the state-run company by up to 46.7 percent.

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By CNBCTV18.com August 17, 2022, 6:02:44 PM IST (Published)

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RailTel Corp shares under pressure as shrinking margin continues to worry investors



RailTel Corporation shares faced selling pressure on Wednesday, after Investec lowered its earnings estimates for the company and lowered its target price for the stock by almost 24 percent. The stock of RailTel — a state-run provider of telecom infrastructure — fell by Rs 3.3 to Rs 96.6 apiece on BSE during the session before recovering about two-third of those losses.


Investec continued with a 'hold' rating on the RailTel Corporation stock, saying the company has disappointed on growth and margin fronts since its listing.

The brokerage also lowered its earnings per share (EPS) estimates for the company for the years ending March 2023 and March 2024 by 46.7 percent and 25.6 percent respectively.



Investec revised its target price to Rs 110 from Rs 144 apiece.

RailTel shares traded with higher volumes on Thursday. A total of 55,000 shares changed hands during the session as against a daily average of 44,000 in the past two weeks, according to exchange data.

Last week, RailTel Corp reported a net profit of Rs 25.1 crore for the April-June period, a rise of 20.8 percent compared with the corresponding period a year ago. Its revenue came in at Rs 370.5 crore, up 21.8 percent on a year-on-year basis, according to a regulatory filing.

RailTel Corporation's margin, however, slid by 160 basis points year-on-year to 17.8 percent for the June quarter.

The RailTel stock is not far above its IPO price since a strong debut on Dalal Street in February 2021. It began its secondary market journey at a premium of about 16 percent over the issue price.

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