State-owned Rail Vikas Nigam Ltd. (RVNL) gained nearly 5 percent in morning trade on Monday after the company announced that it has formed a joint venture company with Kyrgyzindustry-OJSC (Open Joint Stock Company) for the development of infrastructure in Kyrgyzstan.
The infrastructure development arm of Indian Railways said that the joint venture has been named ‘Kyrgyzindustry-RVNL’ and is a closed joint stock company (CJSC).
A closed joint stock company is one in which shares are distributed only among the company’s founders or another predetermined circle of persons, while an open joint stock company has publicly-traded shares, which can be traded without the permission of other shareholders and is not subject to other limitations.
RVNL said that the core purpose behind forming this joint venture is for the construction of rail, road, and other infrastructure in Kyrgyzstan, a land-locked country in Central Asia. It would have a 50 percent shareholding in the joint venture with Kyrgyzindustry-OJSC.
After the announcement, shares of RVNL rose as much as 5 percent on Monday to hit the day’s high of Rs 70.75 on the BSE. Notably, this rally comes after the stock has lost nearly 9 percent in the past seven trading sessions.
However, barring the previous week’s performance, RVNL has proven to be a multibagger stock for investors in the recent past. The stock price has surged over 93 percent in the last year, a massive 129 percent in the last six months, and over 28 percent in the last month alone.
The stock has seen such a sharp rally as investors anticipated solid capex growth in the upcoming Budget 2023 which may augur well for state-owned infrastructure firms like RVNL. A few recent reports also said that the Central government was considering selling up to a 10 percent stake in four companies, including RVNL.
RVNL is engaged in the business of implementing various types of rail infrastructure projects assigned by the Ministry of Railways. This includes doubling, gauge conversion, new lines, railway electrification, major bridges, etc.
