RVNL, IRCON shares drop over 4% on dismissing merger reports

Shares of Rail Vikas Nigam Limited (RVNL) and IRCON International dropped as over 4% each on Monday, March 9, after both the companies’ informed exchanges that they did not receive any information regarding the merger of the two state-run entities.

RVNL shares dropped as much as 4.62% to hit an intraday low of ₹272.80 and IRCON stock plunged as much as 7% to hit an intraday low of ₹136.80 on the National Stock Exchange.

"We wish to clarify that the said news item and any discussion relating to the captioned subject is not based on the information/details available with the Company. The Company is not engaged in any such discussions or negotiations," IRCON said in a regulatory filing.

RVNL in a separate filing said, "We wish to inform you that the RVNL has not received any intimation/communication from Ministry of Railways or any other Authority regarding Merger of IRCON and RVNL. We wish to reiterate that the Company is and will continue to comply with SEBI Listing Regulations and keep the stock exchange(s) duly informed of all material information / events, including price sensitive information(s), in accordance with the applicable provisions."

RVNL and IRCON shares came under buying interest on Friday after media reports suggested that government may consider merging two railway state-run entities.

Following the report, shares of IRCON jumped as much as 12.45% and RVNL advanced as much as 6.86% on Friday.

IRCON and RVNL Q3 earnings

IRCON reported net profit of ₹100 crore in October-March period, marking an upside of 16% from ₹86 crore in the same period last year.

Its revenue from operations, however, declined 19% to ₹2,119 crore from ₹2,613 crore.

RVNL's revenue grew to ₹4,936 crore with a profit before tax (PBT) of ₹359 crore in third quarter of current financial year. The company’s total orderbook stands at ₹87,000 crore, with the majority of the orderbook coming from railway nomination at ₹40,000 crore.

The management guided for flat revenue growth due to a shift in the bidding process.

As of 2:01 pm, RVNL shares traded 4.2% lower at ₹274 and IRCON was down 6% underperforming the NIFTY50 index which was down 2.4%.