For decades, Larsen & Toubro has been the default name for everything that needed to be built in India, from airports and refineries to metros. Its rise from a mid-sized contractor to an engineering behemoth is the stuff of business-school case studies.
Now, a much smaller name is beginning to echo that story.
Rail Vikas Nigam Ltd (RVNL), once a low-profile executor for Indian Railways, is rapidly transforming into a full-scale engineering company. Its order book has crossed Rs 1 trillion (Rs 1 lakh crore), nearly four times its revenue, and its ambitions now stretch across railways, metros, highways, ports and telecom fibre.
The company is following L&T’s path, but it is doing it on fast-forward.
From bureaucracy to bidding
For most of its life, RVNL simply implemented projects assigned by the Ministry of Railways. It did not need to chase work, only deliver it.
That is not how it operates anymore.
Over the past five years, the company has begun competing for open-market tenders, learning to bid, partner and execute in a space long dominated by private players.
Today, more than half of its order book comes from competitive bids. That is a dramatic shift in mindset, from being told what to build to choosing what to build.
This transition has not been accidental.
Management has deliberately expanded RVNL’s scope, taking on metro projects, hybrid-annuity road contracts, port connectivity and BharatNet telecom work. A new road subsidiary has already entered the highway-development space. The company is diversifying its business, adding legs that can keep the growth engine running long after the core railway cycle stabilises.
Scale with discipline
RVNL’s execution muscle is what makes the story credible.
The company has scaled its business without sacrificing stability. Operating margins have stayed steady at 5–6%. While not very high, they are respectable for a pure-play EPC (Engineering, Procurement and Construction) firm, but less than half of what L&T operates at (13% in FY25).
However, there is scope for improvement going forward as the project mix tilts toward high-value, design-intensive work such as metros, solar, international EPC and maintenance JVs (Joint Venture). The Vande Bharat sleeper-train project will likely be the next big margin driver, given its five-year delivery cycle and manufacturing component.
Handling the shift
For RVNL, scaling up in infrastructure is not just about winning orders, it is about managing complexity.
The EPC major has moved from executing simple doubling and electrification jobs to handling urban-metro and multi-modal-corridor projects. It has upgraded its design capabilities, formed joint ventures and strengthened its project-monitoring systems.
So far, it has managed this transition without the bloat that usually comes with rapid expansion. The company’s decentralised structure and reliance on digital tools in project tracking have helped it handle the higher workload while keeping costs lean.
This is where RVNL’s maturity shows, scaling methodically.
Following L&T’s arc
The L&T comparison does not come out of thin air.
Both companies started in infrastructure niches and grew by broadening their canvas.
Both built reputations on timely delivery and technical competence.
Where L&T spent decades mastering diversification, RVNL is compressing that learning curve into a few short years. It is expanding intelligently, using subsidiaries and JVs to enter new verticals such as rolling-stock maintenance, nuclear partnerships with Rosatom and solar EPC projects.
In fact, RVNL plans to bid for Rs 30,000–Rs 35,000 crore of overseas projects this year, expecting a healthy strike rate of 15–20%. Its current international order book of Rs 4,000 crore could grow substantially, adding a new layer of diversification.
Why growth has been muted lately
RVNL’s FY25 growth was softer than expected and Q1FY26 numbers showed a decline, but the reasons are more transitory than structural.
FY24 was a high base year with strong project execution and front-loaded billing in rail electrification and doubling works. FY25, by contrast, faced slower execution because several new projects were still in the early stages of design, land clearances and mobilization. Some large BharatNet and metro contracts also saw delayed approvals, pushing back revenue recognition.
Q1FY26 remained weak as well, largely due to seasonality and project mix. A higher share of low-margin electrical and signalling packages dragged down blended margins, while the ramp-up of new projects such as the Vande Bharat sleeper train and metro systems has yet to reflect in topline growth.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margins slipped to 1.4% in Q1FY26 compared with 4.5% a year ago, primarily due to fixed-price contracts and front-loaded costs.
But going ahead, management expects profitability to normalise in the second half as execution intensity rises and new orders move into the construction phase.
The near-term softness, therefore, reflects timing rather than weakness.
The road ahead
India’s public-capex engine is not slowing anytime soon.
Railways, roads, ports and urban infrastructure are flush with allocations and RVNL sits at the heart of this cycle.
The company’s Rs 1 lakh crore order book already ensures years of execution visibility. The next trigger will be the Vande Bharat sleeper project, with the first prototype rolling out in June 2026. Revenue recognition comes after, with 6–8 train sets expected to deliver in FY27 and full execution of 120 train sets by FY32.
As these projects scale, margins could inch higher.
Any expansion on current levels would meaningfully lift profitability given the sheer volume. Plus the steady returns from international and maintenance JVs and RVNL’s earnings trajectory looks comfortably upward.
Valuation
RVNL’s stock has already been a multibagger.
At around 60 times trailing earnings and 7.5 times book value, the stock is not cheap. While expensive, part of this premium comes from visibility and credibility.
Investors seem to be looking beyond the near-term softness in revenue to a future where RVNL, backed by its visibility, order book and diversification, can eventually sustain strong double-digit growth as execution ramps up and new segments like Vande Bharat and international EPC take shape.
And if margins expand and overseas diversification delivers, these multiples could well find justification in the years ahead.
The bottom line
RVNL may have started as a government arm, but it is now behaving like a professional engineering firm that is lean, competitive and ambitious.
Its Rs 1 lakh crore order book offers years of growth visibility, its project mix is broadening and its execution systems are maturing.
It took L&T decades to become India’s engineering backbone.
RVNL’s journey has only just begun, but the direction looks unmistakably similar. And if margins inch higher as scale and complexity rise, this quiet PSU could well script India’s next great infrastructure success story.
From rail lines to lifelines, RVNL is building not just India’s tracks but its own future as the country’s next engineering giant.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
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Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
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