Rail Vikas Nigam Limited ($RVNL)

Good afternoon, ladies and gentlemen. I'm Kartikeyan, moderator for the conference call. I would like to welcome you all to the earnings conference call of Rail Vikas Nigam Limited for Q4 FY 2026. We with us today, the management team of RVNL, Shri. Saleem Ahmad, Chairman and Managing Director; Shrimati Anupam Ban, Director Personnel; Shri. Mritunjay Pratap Singh, Director Operations; Shri. Abhishek Kumar, Director of Finance; Shri. Amit Tandon, Director, Projects; and Shri Chandan Kumar Verma, Chief Financial Officer. [Operator Instructions] Please note that this conference is being recorded. We will start with a brief opening remarks from CMD sir which will be followed by a question-and-answer session. Thank you, and over to you, sir.

Should I start?

Yes, please.

Good afternoon, everyone. Thank you for joining us today for our earnings call of RVNL for this quarter and year ending 31st March 2026. As all of you know, RVNL's portfolio comprises primarily of infrastructure-focused businesses, which spans across rail infrastructure, metros, roads and highways, transmission and port harbor. Although this year has been challenging for the company, RVNL has remained focused on sustaining its operational performance and ensuring timely execution of key projects. Despite market and sectoral headwinds, we continue to maintain a strong order book and are actively working towards improving efficiency and expanding business opportunities. With continued government emphasis on railway infrastructure development, we remain confident about the long-term growth prospects of the company. As a result of which, the company has achieved an MOU rating of very good for the year 2024, '25 from Department of Public Enterprises. I am pleased to share that our order book continues to remain strong and diversified, providing healthy multiyear execution visibility for the company. During the quarter ended January to March 2026, the stand-alone order inflow stood at INR 4,644 crores, while for the full financial year, 2025-26 stand-alone order inflows were INR 5,875 crores. With joint ventures, we have also secured works amounting to INR 1,211 crores, so as of now to 31, 2026, the company's total order book stood at an impressive INR 99,262 crore. The order book is primarily driven by Railways with INR 57,000 crores, followed by Signaling at INR 14,900 crores, port, roads and highways at INR 10,400 crores and metros at INR 9,900 crores. And we have works of power and transmission of about INR 4,000 crores and hydro and irrigation projects at INR 2,000 crores. Growth and movement in the order book was supported by new railway and multisector infrastructure works awarded to RVNL. Sturdy execution leading to revenue recognization and our disciplined margin, focused selective bidding strategy, this strong and well-balanced order book positions the company confidently for sustained growth in the coming years. The company reported a strong growth in revenue during quarter 4 financial year 2025-'26 with the stand-alone turnover increasing by 47.6% quarter-to-quarter. If I compare it to quarter 3 financial year '26 to quarter 4 of financial year of '26, with a growth of 4.8% when compared to quarter 4 of '25 to quarter 4 of '26 and 0.72% year-to-year growth, reflecting healthy execution momentum and improved project activity during the quarter. On a consolidated basis as well, turnover grew by 42.94% quarter 3 to quarter 4, 4.8% quarter 4 to quarter 4, '25-'26 and 2.45% year-to-year, demonstrating sustained business expansion and strong order execution capabilities. However, despite the robust increase in revenue, profitability remained under pressure during the quarter. Standalone EBITDA declined by 16.88%, if I compare quarter 3 to quarter 4, 33.55% quarter 4 to quarter 4, '25 to '26 and 26.74% year-to-year, while EBITDA margin reduced from 10.36% in quarter 3 to 5.83% in quarter 4 2026. Similarly, PAT declined by 19.6% quarter-to-quarter and 43.4% quarter 4 to quarter 4, '25 compared to 2026 and 32% year-to-year, indicating margin pressure and increased cost burden during execution. On a consolidated basis, EBITDA and PAT witnessed declines despite higher turnover. The decline in the above parameter is mainly driven by a few onerous contracts and reconciliation adjustment relating to joint ventures. Overall, the results indicate strong revenue visibility and execution growth for the company. However, pressure on margins and profitability remains a key area of concern, which we require close monitoring in the coming quarters. I want to brief that bidding work of this, RVNL company have contributed 31.4% to the total revenue from operations, so showing an increase of 129.50% from the previous year. I want to inform that the company has paid an interim dividend of INR 208 crores, and Board has also expanded a final dividend of INR 148.03 crores subject to approval of shareholders. I want to highlight the progress of the major projects undertaken by Rail Vikas Nigam Limited. One is BharatNet project, which has been awarded by Bharat Sanchar Nigam Limited. It is INR 13,236 crores initiative to provide high-speed back connectivity in rural and remote areas through 8,206 kilometers of OFC infrastructure. Till date RVNL has achieved 15.01 physical progress. Project execution momentum has improved significantly, and work is now progressing at a good pace across project locations, and we are expecting good revenue and profit margin in this year. Another important project is Rishikesh Prayag rail project which is of national importance in Uttarakhand, being drawn up at a cost of INR 37,000 crores. The 125-kilometer project has achieved 74% overall progress with around 96% tunnel excavation complete. Target for completion by December 2029, the project will improve access to the Himalayan region. Another important project is Vande Bharat sleeper trains of INR 14,400 crores projects with 35 years maintenance arrangement being executed by our SPV Kirat Railway Solutions. We are hopeful that first prototype is targeted for launch in December 2026. As [indiscernible] has also received the Bronze design award for 2026 in Italy for excellence in mobility and transportation designs. Performance of our JVs and subsidiaries remained encouraging, contributing INR 399.86 crore to consolidated revenue and INR 64.23 crores to PAT. Additional dividend income received from JVs and subsidiaries stood at INR 43.45 crores during quarter 4 and INR 47.88 crores for the full year. which contributed positively to the company's consolidated profitability. I also brief that the employee productivity showed improvement which has increased from INR 21.23 crores to INR 22.46 crores. This growth reflects enhanced operational efficiency and better utilization of human resources. RVNL continues to demonstrate disciplined execution and stable operational performance, supported by a strong and diversified order book. We remain focused on efficient project delivery, margin discipline and conversion of healthy L1 and LO in pipeline. We are also actively encouraging opportunities in diversified infrastructure and emerging business areas. With sustained progress in key national infrastructure projects, the company is well positioned for long-term sustainable growth and value creation. Thank you for your continued trust and support. So we are open for the question and answer. Thank you.

[Operator Instructions] The first question comes from the line of Vishal Periwal from PL Capital.

Sir, on the margins, though, you did clarify it is coming from 1 of the JV works that we are doing. So is it fair to say, is the work has concluded and probably we'll have a better margin from quarter 1 of FY '27 or do you think probably the base of 4%, 4.5% EBITDA margin is a new base for us?

PAT looks lower in this quarter, but if we adjust for another contract of INR 54 crores, and we have paid municipal taxes on new building and we have readjusted after reconciliation of our SPV amounting to INR 35 crores. So you will see that the PAT is like slightly better than the last year -- than the last quarter. So definitely, now the book like adjustment for the contract has been done. And we are hoping that -- and we are hopeful that we will definitely improve our margins in the first quarter of the '27 year.

Maybe 1 last question from me is, I think we have seen an increase in the receivables in financially year '26 numbers, and that has led to lower cash and lower other income. So I mean, is it coming from this segment or probably any color that can be provided?

Cash flow is a challenge because we are working for Ministry of Railways, and we have to get money from Ministry of Railways. You see that over INR 3,400 crores were receivable from MoR, which we could not get within this year, but we have received now in April, so that was the reason for cash flow negative.

[Operator Instructions] The next question from the line of Abhishek Leekha from Nestle LLC.

My question is on the receivable part on the Krishnapatnam Railway Companies, which is standing at INR 1,116 crores, including INR 890 crores of interest. What is the timeline for resolution and how much we can realistically recover on that?

Good afternoon. The total receivable, which is due from the Krishnapatnam stands at INR 1,116 crores which comprises of 2 components, basically, the principal and the interest component. And during the last year gone by, Krishnapatnam has given a has a healthy return of around INR 290 crores out of their -- which was due from them. And with the continued good performance of Krishnapatnam Rail Company, we hope that in the coming 2 years' time, mostly there receivables will be wiped out, and the -- we will also turn profitable and due to their good performance. They have given a total dividend of INR 50 crores this year, out of which RVNL has received share of INR 25 crores.

Okay. And what kind of top line growth that can be expected in '26, '27 and how should we take the margin outlook from current because what I understand from last con call was you mentioned that 2027 as far as execution would be better off and also margins would be comparatively on the brighter side?

Yes, we are definitely expecting a good rise in our revenue, which will be around, say, 15% to 20%. And even the margins will definitely increase. that I want to assure you, and it could be much better than this year.

Should we expect it like from the current quarter itself, June quarter onwards, like the top line growth and followed by the margin growth to start seeing?

Yes, definitely, quarter-to-quarter, year-wise, definitely, there will be improvement. But the quarter -- first quarter will be slightly challenging for us, but we are hopeful to achieve the targets and have a good revenue and good profit, good margins.

Next, we have a follow-up question from Vishal Periwal from PL Capital.

Sir, in terms of our order book of INR 99,000-odd crores, what is the breakup in nomination and competitive bidding now?

If you see our breakup or nomination in bidding is almost 50%, 50-50 each. Presently, INR 45,000 crores works of order book and 45% or INR 45,000 crores are on nomination basis. Our business strategy is that we should focus on Railway work which we already have in pipeline, which is almost INR 30,000 crores works are going on. In addition, we are talking to other PSUs and government for management works on P&C basis like we have got works from NMDC, Vishakhapatnam Port Trust and others, and we are focusing that we should get more work on P&C. And third line will be -- vertical will be from the bidding works. But this time, we are not bidding very aggressively for the bidding works. We have kind of positioned ourselves like that, that we should get at least 5% to 10% profit from each works of bidding. So that is our target and our strategy.

Sure, sir. And in terms of our order inflow though, you did clarify stand-alone basis is FY '26 and are for the JVs, can you also share what is the inflows in quarter 4 and FY '26?

In JV, we have got 1 work in addition 3 from Railways which is a bidding work of INR 1,200 crores right now. And we are -- we are expecting that we should get more work in future definitely.

Okay. Okay. Sir, I think if I look at our order inflow, including JVs, everything is to the tune of maybe like INR 7,000-odd crores for this year. And we have done, I mean, execution of INR 20,000-odd crores in terms of revenue. And our order book has seen increase, so is there a large part of this change is coming from the scope change or anything that you can share on this?

Actually, if you see the order book which we have received during the last financial year was around INR 6,000 crores. And decision from the bidding works also stand around INR 6,300 crores. So the order book inflow and the execution matches, but in the coming years, the execution from the bidding work will increase tremendously because as you've seen in the last year, as compared to financial year 2025. In financial year '25, '26, it has increased by almost 129% which was INR 2,237 crores in the financial year '24-'25, which has increased to INR 6,283 crores in the financial year '25, '26. So our order book is healthy, and we hope that will increase execution also, order book will be able to give us a good handsome revenue. And the change any projects is there, especially in macro projects and other projects, which we are excluding even road projects, we got of change ofscope as per the requirement of the site and plans.

Okay. sir, in terms of, I think, a lot of cost inflation that we are seeing in terms of commodity prices and other things. I understand nomination order, which is almost INR 45,000 odd crores, things are passed through but in competitive bidding, is it a fixed price contract or there are escalation? Can you share anything that?

They are a different type of contracts. Some are fixed contracts from our dynamic also. But in most of the contracts, we get the price variation to which controls the fluctuation of the market, but definitely challenges will be there.

Yes. Okay. Okay, sir. And then in terms of Vande Bharat order, though you mentioned until December '26 that we plan to supply and the total order that is there of 120. So by when this will get concluded, how are the billing is scheduled after prototype is submitted?

Proto type will be completed by this year only. So we will in 2 quarter. And after that, in next...

The total order -- Vande Bharat order book is to be completed in 5 years' time. And with a greater increase every year, the first year after proto type, we have to supply because after supplying the proto type, it takes around 2, 4 months time for the various trials and other work. Thereafter, in first year, 5 sets will be supplied, thereafter, it will be increased, and the total 120 sets will be supplied in 5 years' time.

[Operator Instructions] Next, we have a follow-up question from Abhishek Leekha from Nestle LLC.

My -- I just wanted to have the understanding on what steps the company is taking so that fast track execution can be cleared on priority in terms of like automation or steps that are being taken when -- which helps the company to enhance the execution capability?

The main challenge for us is faster execution, then only we can have good revenue and good margins. So our whole team is focusing on it. We are using latest technology like we are using a model, which give us 5G functions, we'll give the progress, financial progress and plan progress versus our actual progress. We are using drones for the site in the inspection, and we are using many kind of softwares with kiosks, dashboards and give us the performance on our dashboard. So many things are being done at every level from the supervisory to the top management. And our focus is for the fast execution of the work and timely execution of the work.

Can we have a presentation kind of where and you give the points or the areas which the company is doing a lot of exciting work and good work, so that we also understand what exactly the company is doing in terms of execution readiness and how well that can be put in use or has been -- or you might be using it so that it gets communicated well amongst their share -- among the stakeholders?

Thank you. This is a very good suggestion, and we will definitely implement it and put it on our website, so that every stakeholders can go through it. And if they have some suggestion, we will be happy to incorporate.

And if that can be like in a presentation like in a quarterly or a yearly kind of a thing, that would be great also, because a lot of questions can be put on basis of that. And O more thing, has RVNL approved to develop or upgrade corridor, specifically for the defense logistics because in this war scenario, railways can be -- also be used as a defense logistics. So anything specifically that can be done by RVNL in that line?

Yes, definitely, we are doing, but we will not be able to explain here. There will be many strategic projects in pipeline.

[Operator Instructions] We don't have any follow-up questions.

Shall we close now?

Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a pleasant day.