RailTel Corporation of India Limited (RAILTEL.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Post Results Q1 FY '26 Earnings Conference Call of RailTel Corporation of India Limited, hosted by Antique Stockbroking. [Operator Instructions] Please note that, this conference has been recorded. I now hand the conference over to Mr. Vishal Periwal from Antique Stockbroking. Thank you, and over to you, sir.

Yes. Thanks, Anushka, and I welcome all the participants and from investors and analyst community for the post results earnings call of RailTel Corporation of India Limited. And I'd also like to thank the management for giving us this opportunity. And the management team from RailTel is led by Sanjai Kumar sir, who is the Chairman and Managing Director; V Rama Manohara Rao sir, who is the Director of Finance; and Yashpal Singh Tomar sir, Director, Network Planning and Marketing. And apart from that, there are other members from the team also have joined the management. As usual, we'll have a brief from the management on the gone by quarter, and then we'll have a Q&A session from the participants. Yes. Thank you, and over to you, Sanjai, sir.

Thank you, Vishal ji. Very good morning to all. It gives me great pleasure to interact with you on the company's performance in the backdrop of Q1 financial results of FY '26, which were declared by the company on 28th July 2025. The company had a strong start to our financial year 2025-'26, having achieved operating revenue of INR 744 crores in Q1 of FY '26 as against INR 558 crores in Q1 of FY '25, registering the Y-o-Y growth of 33%. The Telecom segment contributed INR 335 crores and Project segment contributed to INR 409 crores in the company's operating turnover. As regards the total revenue, the year-on-year growth is 31% with INR 758 crores in Q1 of FY '25 as compared to INR 578 crores in Q1 of FY '25. The profit before tax -- sorry, there is a correction, INR 758 crores in Q1 of FY '26 as compared to INR 578 crores in Q1 of FY '25. The profit before tax PBT in Q1 of FY '26 is INR 89 crores as against INR 67 crores in Q1 of FY '25, registering a growth Y-o-Y growth of 34%. The profit after tax in Q1 of FY '26 is INR 66 crores as against INR 49 crores in Q1 of FY '25, registering year-on-year growth of 36%. Earnings per share in Q1 of FY '26 stands at INR 2.06 as against INR 1.52 of Q1 in FY '25, registering a growth of year-on-year growth of 36%. Order booking during quarter ending 36/2025 was to the tune of INR 721 crores as against total order booked during Q1 of FY '24-'25 of INR 218 crores. The company has robust order book position of INR 7,197 crores as on date, out of which close to INR 500 crores are related to Kavach projects. I'm happy to inform you that CAB has offered nil comments on annual financial results of FY '24-'25. We remain committed to pursuing growth and creating value for our esteemed investors. We are also exploring opportunities in order to realize our true potential. I thank you for your trust and collective vision for the future of this company. Thank you, Jai Hind.

[Operator Instructions] We take the first question from the line of Vishal Periwal from Antique Stockbroking.

For the question queue assemble, I just thought to maybe like ask a few questions. First, I think, sir, we have done a pretty strong set of start for this particular year, doing a healthy 30% plus kind of revenue growth. And how exactly you are seeing things for the full year? I think we are already there like 1 more month in the quarter 2. So how things are and for the full year, how do you see things? Any color that can you provide, sir?

So, if we talk of revenue overall year, we would take somewhere around 25% growth if we take overall year. Since the base number is growing, so the overall growth, I would take around 25%.

Right, sir. Right, sir. And I mean, I mean usually, we have already in this past release also we have said that it will be more like a single digit for the projects -- single digit for the Telecom and high double digit for the projects. So, it's the same thing is expected to continue.

Yes.

Right.

Telecom, again, Telcom market is not, I would say, in India, it has been -- it has been a characteristic of Indian Telecom market. So, Telecom market growth is going to remain stunted. But the biggest advantage, which I always repeat, we being in the ICT and IT domain, Telecom market acts as a catalyst for many of our project business income. So, I wouldn't say that it is not important. Directly, it may not be contributing -- it may not be seen directly to contributing to the top line. But this being part of our portfolio certainly assists and helps us in getting many IT, ICT projects.

Got it, sir. Got it. And in terms of our order inflow, we have seen a decent set of inflow. So, any particular sector which is driving it? That is number one. And second, any green shoots or any emerging sectors that you are seeing could drive our order inflow in times to come?

See, we see we have started gaining momentum in getting railway projects recent quarters. And so, we see that now we are getting -- we started slow, but now we are getting good number of projects from railway tenders. Of course, those are not nomination. So, you must have seen that recently, we got another Kavach order also. So -- and a few tunnel communication projects already there with us, some signaling, auto signaling and EI work already we are doing. So that is one sector where we are working. And many state government projects where we have been strong since beginning, we are getting good orders even now. Some Smart City projects may come to us. Like similarly, another third front is that international business. We have started a very small beginning, and we hope that in the years to come, our international business, which will include not only IT and ICT Telecom, but railways also, is likely to be part of that. But it will take time because we are starting and starting international business requires, I think, different kind of efforts and energy. So, we are gaining experience in that.

Right, sir. Right, sir. So, the key takeaway is, I mean, what I would gather is the railway order as a sector, which was a bit muted in maybe 6 months back. So, things are kind of picking up there. And within that, Kavach in plus signaling is something which is driving the traction. That's fair to understand.

Yes. At least in the short term, I can say yes.

Got it. Got it. And in terms of pipeline on Kavach front, anything that you see here from the ministry that they want to award orders to this extent at least for next 6 months or 12 months? Anything on that front, sir?

See, this is very difficult for us as a bidder, as a service provider, it is very difficult for us. But these tenders are being floated by different zonal railways and units, and they are coming out with tenders as and when. I think now apart from tenders, there's focus on delivery also, implementation also. So, implementation also has to pick up.

The next question is from the line of Karan Sanwal from Niveshaay.

Congratulations on a good set of numbers and good start to the year. I have a couple of questions regarding Kavach, which the previous participant also touched upon. So, you said you have already highlighted that we have already won 2 orders for Kavach. So, I wanted to understand, like how is the execution on that part? What are the time line for execution? And are we starting to do the groundwork right now? Or is it would be done maybe a few quarters down the line, if you could highlight?

So, these projects are, of course, engineering intensive and you have to work along the track every kilometer. So, these will be going up to, say, '27 -- 2027, '26, '27, mostly the executions will happen. And some part of it may also be there in '27, '28 as well. So, these are long-term project execution time lines, 18 to 24 months.

So you're talking about the execution of the order we have already won, right, the INR 1,100 crores.

Yes, I'm talking about that only, yes.

And have you bidded for other Kavach projects lately? Or are we expecting any bid results maybe 1, 2 quarters down the line?

So, we have already -- there are a few tenders where we have participated bids. And wherever these bids are coming, there's no question that we will not bid, and we'll certainly try to win.

Understood. And also, have we -- so we have already tied up with the OEM partner. So, wanted to understand how is the conversation with those partners? Like have they received a certificate to execute Kavach orders? Or how is the time line over there, if you could highlight something on that part?

Those certifications are, of course, lengthy and very detailed because it is related to safety. And right now, we see that we are going in the right -- at the right pace in the right direction. And therefore, we don't see any challenge on that front. But certification is yet to happen. It is underway. But there's a lot of field work is required, which is going to take time, like laying off cables, say, about 1,000 kilometers of cable, many towers have to be erected, many drawings and those have to be approved with the railways. So that work is going to take time. So, this certification will not substantially going to -- is not going to affect our actual progress. This will happen in parallel.

So maybe -- so our scope of work may already have been started in some sort of way or I imagine, right?

Yes, we have all started on field, yes.

Okay. And also.

That's how things have happened.

Okay. Understood. What is the approximate proportion of revenue of those projects flowing to us, maybe an approximate percentage, if you could highlight?

I told you those are close to INR 500 crores. Exact figures, I don't remember both the coverage orders put together. So that is what -- this year, we might clock some revenue, but majority of revenue should come next year from these projects.

Understood. One last question. So, we -- from what we understand, we record the entire revenue of Kavach, and then maybe a proportion of expenses that is subcontracted is highlighted in the expense portion, right? Or we only record our portion of revenue?

No, no. This is total revenue.

Okay. Understood. So, we would be adding the subcontracting charges to the OEM for the equipment that they provide is what -- is what.

In orders it includes everything. Order includes complete supply chain.

Correct, correct.

It never excludes anything. Yes.

So, our portion would be around 60%, 70%, maybe 50%, 60% of the revenue of those orders?

No, no. Revenue is completely with us. It is going to add to our turnover only.

Okay. Understood, understood.

Yes, yes.

[Operator Instructions] The next question is from the line of Mohit Mishra from ICICI Securities.

Yes. Sir, I had a couple of small questions. Can you -- in the Telecom services, can you give the breakup of NLD, ISP and IP revenue for the quarter?

Yes, sure. So, if we talk of NLD, it is INR 151 crores. ISP is INR 108 crores, which includes about INR 83 crores from RailWire and INR 24 crores from IP. And remaining about INR 51 crores -- sorry?

Could you repeat the ISP one?

INR 108 crores.

Okay, okay.

And about INR 51 crores is from data center-related business.

Okay, sir. Got it. And secondly, sir, I'm sorry, but I missed the order book number in your opening remarks. Could you please repeat that number?

Order book number is INR 7,197 crores.

And -- what percentage of that would be railways?

It is around 30%, 31%.

[Operator Instructions] The next question is from the line of Vishal Periwalfrom Antique Stockbroking.

Yes, sir. [Technical Difficulty]

Your voice is not audible, Vishal ji.

Yes. Is this better now?

Yes.

So on ECL, usually, we do provisions in our P&L. So, anything that we have done for quarter 1 of this year, sir?

There is reversal in this quarter, INR 3 crores, I think.

Okay. Got it. So, there is no -- any one-off -- no major one-off there? It's numbers are recurring in sort of nature?

Yes.

Got it. And sir, order book, which you mentioned, what will be the share of Kavach in this, sir, the INR 7,200-odd crores order book?

Exact numbers, I'll have to find out. It's close to INR 500 crores. I think somewhat less than that.

Okay. Okay. Usually, sir, like in the previous presentation, we have given a further breakup of order book. Then they'll be...

Your voice, can you please repeat?

Is this better now?

Yes.

Yes. Sorry for that audio. Sir, in our previous presentation, we have given a breakup of the order book that is between railways and other sectors. So, if one has to understand from a margin profile point of view, which segment give us the highest margin and then maybe like which is kind of where the competition is pretty high, which gives a low margin. So, can you give some color on that order book profile from a margin point of view?

I can give some clue whatever I have understanding. So, railways projects generally are -- they are good margin projects with us. But otherwise, in general, IT projects, margins are really very difficult to have. We are -- certainly this quarter, we have slightly bettered ourselves, made our position better. We have, I think, 5.28% margin in projects. Otherwise, generally, 4% to 5% is the margin. If we talk of sector specific, it is not -- it is very difficult to figure out one section -- sector against the other sector. So, it is mix, I would say.

Okay. Okay. Got it. And typically, I think from a number of players who are bidding, say, in Indian Railway project and then ICT, what will be the difference, sir? How many players bid in the railway projects and how many in the ICT typical project, sir?

Again, this is plays sector to sector.

And it's -- if I can add, I think it's very difficult to generalize that way, Vishalji. It all depends upon the project and its -- I mean, various other aspects and location in which this project is how tough it is. So, there are many other parameters on which the competition prevents.

Got it, sir. Got it. And in terms of data centers, I think one is like -- I mean, like in coming months and quarter, can we have a separate line segment in our Telecom just to see how the traction. That is one. And second, I mean, can you give some color where we are right now? Any targets or plan that we have, one for our own data center and second is the Edge that is there -- Edge data center, sir?

Edge, so if you talk of data centers, so data center-related income, we are certainly growing comfortably around 15% to 20%, we take overall. But there are one-offs also which might -- because numbers are small, we are growing in this segment. So that is why we have not created a separate line segment now. Once it becomes a substantial number, certainly, we will make it. Now, if we talk of Edge data centers, so Edge data centers, we have -- we should clock some numbers this year. I think last conference, I told you around INR 10 crores. And so, I stay with that number if we talk of Edge data center.

Okay. Okay. And in terms of our own data centers, sir, what is the capacity right now? And how do you see this going in this year and next year? And any plan around that?

So, our own data center, which is -- see, even these data centers are our own data centers. There's only -- it is not -- I would say that, this is not debt per se, but they are not the technology partners. The ownership of these data centers remain with us. Turnover is also coming to us. These data centers are required because those existing data centers are almost working at the close to capacity. So that is why we require this. We are also likely to start something with third-party data centers only as far as the infra -- passive infra. So that line of segment is also likely to start this financial year. As you know that we have made some MOUs with third-party data center infra service, only passive infra services will be taken from them. So data center, we see that this year is going to be really, I would say, we would be embarking on a new journey. And in next financial year, these results would be certainly visible.

Right, sir, right. And so if one understand, so one is the Edge data center where I mean, like we have a revenue share sort of model. And then there is another -- I mean, will the model be similar to revenue share? Or how exactly it is structured?

So see, it is -- it won't be appropriate to share all those models because we are flexible. Whatever suits to the benefit of RailTel, we will have that flexibility. It may be revenue share. It may be leasing passive infra from them depending upon the circumstances and the need of the project, which we would be doing. We are not going to stick with one single line of this thing.

Got it, sir. And in terms of megawatt, any plans that we have, sir? I mean, like in terms of what megawatt.

Noida Data center, which where work has started already, Noida Data center, that is going to be ultimately to begin with, we'll have 5 megawatt in next 2 years. And then later on, we will upgrade it to 10 megawatts.

Okay. Got it, sir.

But it already started there as 5 megawatt. Yes.

Okay. And in terms of Edge data center, sir, any megawatt target?

Edge data centers will be a smaller one, say, around 0.2 kilowatt -- 0.2 megawatts, sorry. And this year, we might think maybe 4 or maybe 5 Edge data centers, we should be able to begin.

Okay. Got it. And maybe one last thing, sir. In terms of our CapEx plan, how do you see -- what we have done in this quarter? And how do you see the full year? And third, maybe parallel to that, like where exactly we are doing this CapEx, which segment we are doing this? Yes, that's all from my side.

So this quarter, we have done around INR 66 crores. And we have planned already for INR 350 crores kind of CapEx for the whole of the year. Yes.

And which segment we are doing the CapEx, sir?

Mostly, it is going to data center and Telecom, but there would be some smaller numbers like power plants, optical fiber, maybe some software. Generally, it is data center and Telecom equipment.

Okay. And if one has to understand in terms of the maintenance and vis-a-vis where we are adding capacity, so how the split will be, sir, in the annual CapEx?

Maintenance will never come to CapEx. It is part of revenue expenditure. Maintenance is part of CapEx.

The next question is from the line of Parimal Mithani from Credential Investments.

I just wanted to know the guidance for the year, if you can just tell us?

So it will be somewhere around 25% for the whole of the year.

Okay. And will be maintaining the same margin, sir, for the year like time?

If we talk of margin range overall this thing so it will be around 11% to 12%.

The next question is from the line of Rakesh Roy from Boring AMC.

My first question regarding your INR 500 crores Kavach order, sir. Sir, this order will execute by RailTel only or you have any JV or any other company to execute this order?

There is no JV as such, but there are, of course, partners.

Okay. Yes.

See, we -- we -- yes, yes. OEM is a partner, and then there will be partners who will do the field activities like cabling and tower erection.

Okay. Right, sir. Can you share the name of any company -- so last time I was reading about the company Future Tek, they are having MoU with your company is here to execute Kavach orders. So, can you highlight on this?

They are our OEM of Kavach equipment Quadrant Future Tek. You are right. and we have an MOU with them.

Okay. And sir, lastly -- just you mentioned it takes time to get certification. So, what type of certification take time and how much is general take, sir?

I think you missed it. I have already answered this question very much in detail.

Yes, I missed it, sir.

This certification is done by railway organization because this is a safety item. And this is being deployed for the first time. This kind of equipment is indigenously developed by Indian company. And so once it is approved, then it will not require every time. Then afterwards, it will require only inspections. So that process is going on for all companies. It is not only our partner company, but it is for all 5 OEMs, whose one has already got that is SPL, but 4 others are under approval, yes.

Okay. Right, sir. And sir, this Kavach system is developed by in-house by RailTel or how is it, sir?

No, it has been developed by Railway is a unit organization known as RDSO in collaboration with industry. So RailTel has not done anything to -- any contribution to this product development.

[Operator Instructions] The next question is from the line of Karan Sanwal from Niveshaay.

Sir, just one query. Sir, do we have -- this exclusive tie-up only with, Quadrant that you just named, or would you be open to tie up with other OEMs for execution of Kavach?

See, execution is a separate activity. As far as OEM for the supply of Kavach project, Quadrant is our exclusive partner. So, execution is being done by various other partners, yes.

[Operator Instructions] As there are no further questions from the participants, thank you members of the management. Thank you everyone for joining. On behalf of Antique Stockbroking Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.

Thank you very much.