Rail Vikas Nigam Limited (RVNL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Rail Vikas Nigam Limited Q1 FY '26 Earnings Call hosted by Antique Stockbroking. Please note that this call will end at 3:40 p.m. in the Indian Standard Time. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Periwal from Antique Stockbroking. Thank you, and over to you, sir.

Yes. Thanks, and good afternoon, everyone, and apologies for the slight delay in the start of the call. So I welcome you all for the quarter 1 FY '26 post results earnings call of Rail Vikas Nigam Limited. The dais for this call is led by a management team of RVNL, starting with Mr. Pradeep Gaurji, who is the Chairman and Managing Director; Mrs. Anupam Ban who is the Director Personnel; Mr. MP Singhji, Director Operations; and accompanied by Mr. Chandan Kumar Vermaji, who is the Chief Financial Officer. So as usual, we'll have a brief from the management, and then we'll have lines open for Q&A. Thank you, and over to you, sir.

Thank you so much. And it's a pleasure to interact with the investors. So I think without much [ listing ], we will take the call because time is limited. So let us -- we are ready to answer all the queries from the investors. Mr.Vishal?

Yes, sir, should we go ahead with the questions?

Yes, yes, please go ahead, because time is -- slightly we are constrained for time today. So we can go ahead.

[Operator Instructions] The first question is from the line of Mr. Vishal from Antique Stockbroking.

Yes, sir. I think the results got posted some time back. So I think maybe that's the reason people are just absorbing the results. So if I can ask a few questions, sir. Can you share a couple of updates in terms of like what has been order inflow last quarter? How we have closed the order book? Anything that can be provided.

Good afternoon. In this particular quarter, there has been some order inflows from civil engineering and electrical engineering. The total orders won this quarter is roughly of value INR 1,000 crores. And total contracts, which now RVNL has won stands at around 96 contracts, of the residual value of the contracts which we have won through open bidding is around INR 60,500 crores. And coupled with our orders, which are our legacy railway projects, that is around INR 41,000 crores. So roughly, the order book of RVNL is INR 101,000 crores, which is [indiscernible].

Right, sir. And in terms of also -- but usually, we do provide the split of this order book, anything on sector-wise? How this is panning out, anything that can be provided.

Yes, our order book is spread out on various factors. The orders which are having from the civil engineering contracts, which is from the railways, highways, metros is -- the orders are around INR 26,000 crores. Orders which are from the electrical is around INR 10,900 crores, and orders from signaling and telecom is of value total is around INR 14,700 crores. In civil engineering, our orders are in metro sector of roughly around INR 10,000 crores. The highway sector is around INR 9,000 crores. And the miscellaneous sector, which includes traditional railway, irrigation, et cetera, is around INR 7,000 crores. And electrical is spread over -- the overhead electrification that is 2x25 conversion in railways, then RDSS, that is a distribution system of the state transports is a major component, and the transmission line is also comprises of the major segment. And other than that, in signaling sector, we have got some of the railway contracts for automatic signaling or modernization in the form of covered system, and a major content of Vande Bharat in which the capital cost is around INR 6,000 crores -- BharatNet is INR 6,800 crores. And considering the complete O&M cost is spread over a 10-year period, it will be around INR 13,000 crores. And we have got a significant order of Vande Bharat manufacturing also, of which the capital cost is INR 8,640 crores. That is the RVNL's share in that JV. That is the roughly break up of the different sectoral orders available with the RVNL.

And in terms of our revenue profile earlier at the end of financial year '25, we were ending that like -- we can clock revenue growth of -- in the range of 10-odd-percent. So given -- I think what I have seen that like the first quarter has been a bit of muted for us and also for the industry. So how do you see this growth number panning out for us for the full year?

Yes. Actually, let me say it. I think the situation is very much in control because, of course, as expected, the proportion of turnover from railways is coming down, which is in the range of almost 25% down. But kindly appreciate that turnover from bidding has increased by 3x. So now this sort of balancing will happen because the turnover from railways will continuously -- will slide. But it will be compensated by increase in turnover from bidding projects. So I'm sure that -- because overall, now it is minus 3.42% as of first quarter. But now, I mean, I can share it with present, we have gone beyond -- I mean, gone more than the last year as we stand today. So things will change and things will rise again. This turnover will be not only able to match last year, we will increase it.

Okay. Okay. That's heartening to hear that, sir. And even particularly on the margin front, I think we are noticing there has been a bit of pressure on the margins for this quarter. So is it fair to say it's primarily a couple of line items like other expenses, they have increased. And even -- I mean, like the other line item, particularly increased, which you are seeing. So that has more to do with like the competitive bid projects, they are entering to revenue recognition. So their margins are a bit lower or anything that can be provided to explain the margin dip, sir?

Actually, when you see the gross margin, there is a slight dip in the gross margin, 13.57%. It is due to mainly the income from MoRs decrease, but the income from projects from bidding has increased by [ 367% ]. And net margin decrease, but there is a reason for that because some of the onerous contracts, where some loss has been recognized, they have been accounted for. And BharatNet project, there were some prebid expenses, they were also accounted for roughly value of INR 20 crores and INR 40 crore due to the of onerous contracts. This INR 60 crores have gone into -- which has decreased our PBT and which ultimately resulted in decrease in PAT.

Sorry, sir, I just missed on that. So INR 60 crore, what was the nature of that?

Yes. [indiscernible]

Basically, there is a onetime expenditure in the BharatNet project, in which we have done one consultancy work -- prebid consultancy work for the bidding survey and bidding all that thing. This is a onetime expenditure, which has been booked in expenditure -- indirect expenditure. Further, a few commercial decisions maybe it's too early, Vishal. In most of the bidding projects, projects we have taken on [indiscernible] basis, expenditure has just started booking in these projects. That's why we -- there may be...

It will not be a final picture basically.

It is not the final picture. We anticipate there may be some losses at the end of it, but in due course, we have seen the value addition. We have some change of the scope, which we have to be -- get sanction from the client. After that, the picture will improve. But right now, yes, we have recognized the 3 new projects, which are onerous contracts in this quarter.

[Operator Instructions] The next question is from the line of Mr. Rajesh Agarwal from Moneyore.

Sir, on account of Bharat Sanchar, how much losses extra you have booked?

Please repeat your question.

On account of BharatNet order, how much extra expenses you have booked without commensurating revenue?

INR 20 crores. Around approx INR 20 crores.

Approx INR 20 crores. And any other one-off is there?

No.

And sir...

Kindly repeat. Kindly repeat?

Any other one-off expenses are there or no?

No such other expenses are there.

Okay. And you feel from second quarter, the revenue mix will start improving?

Yes. We are quite hopeful. Second, it is already -- the green shoots are visible. And in this quarter, we expect to cover the substantial ground, and we hope that our revenue will match last year's revenue to the second quarter, cumulatively.

No, no. We are already ahead now. As of today, we are already ahead in revenue compared to the last year. So definitely, we are making it up by projects taken on bidding. So revenue-wise, absolutely no issue. We will be exceeding the last year's revenue.

And margin, sir?

Margins, there is a slight dip is there -- there is dip in the margin. But that is based on -- I will request Mr. Chandan Verma to say on this.

Bidding projects, booking has just started. Most of the projects, we have started executing the work. So no doubt, it's very early to say that. But margins will improve once the work will start in full swing and change of scope, there are too many claims out there to be sanctioned from the client. Once these claims will be settled, the margins will improve.

Understood. And for JV? When the profitability from the JVs will come? Other railway JVs? Kutch Railway and all?

Kutch Railway, basically Krishnapatnam, this year they have shown profit for first time. And in other JVs also, the traffic has improved. So we are hopeful that this year will get dividend.

HPRCL has already given dividend.

HPRCL has already given a dividend. Even 2 SPV has given dividend this year. So we are hopeful that with the improvement in traffic, more dividends will come to...