RailTel Corporation of India Limited (RAILTEL.NS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day. And welcome to the Post Results Earnings Call of RailTel Corporation of India Limited, hosted by PL Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Periwal from PL Capital. Thank you, and over to you, sir.

Yes. Thanks, Swapnali, and good morning, everyone, and welcome to the analyst interaction with the management of RailTel Corporation. From the management team of RailTel, we have with us Mr. Sanjai Kumar, who is the Chairman and Managing Director; Mr. V. Rama Manohara Rao, who is Director of Finance. Mr. Manoj Tandon, who is Director of Projects Operation & Maintenance, and along with him is Mr. Yashpal Singh Tomar, who is Director of Network, Planning & Marketing. So I think results is already published, and I think we can have a brief from the management on the gone-by quarter or any other commentary, and then we'll have lines open for Q&A. Yes. Thank you, and over to you, Sanjai sir.

Yes. So a very good morning to everybody. It gives me a great pleasure to interact with you on the company's performance in the backdrop of Q3 financial results for FY '26, which were declared by the company on 2nd February 2026. The company achieved operating revenue of INR 913 crores in quarter 3 of FY '26 as against INR 768 crores in Q3 of FY '25, registering the year-on-year growth of 19%. The Telecom segment contributed INR 349 crores and Project segment contributed INR 564 crores in company's operating turnover. The profit before tax in Q3 FY '26 is slightly lower as compared to PBT in Q3 FY '25 due to execution of slightly more number of low-margin projects in this quarter. However, the company is confident to achieve the overall revenue and profit as per the previous projections. The company achieved the total income of INR 2,648 crores during previous 9 months period ended on 31/12/2025, registering 19% year-on-year growth. The profit before tax in 9 months period ended on December '25, is INR 280 crores as against INR 251 crores in corresponding period of previous year, registering a year-on-year growth of 12%. Earnings per share in 9 months period ended on December '25, stands at INR 6.37 as against INR 5.81 of 9 months period ended on December '24, registering a year-on-year growth of 10%. The company's order book is robust at INR 8,470 crore in which will give us the required thrust for future growth. Thank you very much.

Should we questions start the question and answer session?

Yes, please.

[Operator Instructions] We have the first question from the line of Sanjesh Jain from ICICI Securities.

I got a few questions. First, on the bookkeeping side. Can you give us a revenue breakup for the 3 segments within telecom business?

So we have -- right now, we have 2 segments, Telecom and Projects.

No, no, within telecom, NLD, ISP and IP-1.

Okay. Okay. Okay. Within Telecom, got it. So it is INR 155 crores from NLD, INR 113 crores from ISP, and INR 25 crores from IP-1. This is the breakup of core telecom income. Other than telecom income, we have ICT revenue of INR 54 crores, which includes data center and other income and other operating income of INR 3 crores, so total put together is INR 350 crores.

That's very clear. Sir, just 1 question on the telecom business, particularly. Now this year has -- appears to be slightly weaker than earlier what we thought from the revenue growth perspective. And this quarter again, appears to be even lower at 3-odd percent kind of growth in the telecom business. How should we see this growth panning out for next year? And what really is causing this slowness in the telecom business?

Yes. So basically, in telecom market, there have been -- I would say that there have been constant pressure on pricing. That was 1 major reason for I would say, dampened growth theme. But then due to our continuous effort, as I told during previous quarterly meeting discussions, interaction with investors also that we have increased our focus on telecom also, and those efforts have now started showing results. So I believe that in coming quarters, maybe -- may not be Q4, but at least from quarters in the next financial year, we will start seeing results in telecom sector also. But yes, right now, whatever you said, is true, in 9 months, if you see overall, there has been 5% growth. But we -- based on what I said right now, that we have now try to find out how can we increase our telecom income, and we have accordingly increased our efforts, and those efforts will certainly bring dividend. And we should be able to maintain our growth guidance in telecom income in 8% to 9% of range.

And then -- can you brief us what efforts are we doing in terms of accelerating the Telecom revenue?

Yes. So see, one is we have to listen to the market call that you have to reduce your tariffs. Somewhere we were earlier not ready to reduce tariffs beyond certain limit. But then for that, we need to increase the network capacity and all that. And I believe we, as a management, think that this will certainly have impact on our strategy. So we are concentrating on our NLD traffic, which has actually been generally muted. RailWire segment is continuously under pressure. Margins are getting thin, but we are getting now momentum in growth, in numbers also, subscriber numbers that we see. Right now, we have increased -- we are closing -- inching towards 6 lakh subscribers. So RailWire also, we believe that we will make some impact. But our focus is mainly on NLD business.

Got it. Got it. And for this, will be -- do we need to do more CapEx to increase the capacity on the fibre because generally, we have been doing CapEx -- equivalent...

CapEx was already underway and we were only to increase the line cards and all that. So that does not matter much. But we are already underway preparing for this, that's why some time is taken. And you must have seen that we have already done a lot of CapEx during last 2 years in our telecom network.

And within the telecom, we also thought this data center, what we have done deals with Techno, that would also start contributing. Is there any delay in that contribution as well?

See the data center, which is major contributor, which is supposed to be a major contributor is likely to be ready by March '27, because that is under construction. But yes, we have started smaller scale activities in edge data centers at 2, 3 locations, like in Gurgaon, in Mumbai and one is also now ready for starting work in Indore. Those will be small ones. And there, we should get business numbers. Apart from that, our agreements with the Anant Raj and other like TCS and the likes. There also, we are finding some traction and we should get numbers in the next financial earlier from these activities in data center.

Next, on the project business, any new deal wins in the KAVACH railway project and deployment of 4G, 5G?

In deployment of KAVACH, one tender, we have already participated and results of that tender is yet to be declared, but otherwise, there is a status quo as far as the PO received is concerned. We already have 2 older orders, which are in East Central Railway, amounting to a total INR 468 crores. And work is going on at site in these -- against these 2 orders. But one tender is still undecided. We are waiting for the results to come.

And deployment of telecom services, towers and all, anything on that?

That is part of the KAVACH. That is part of -- the towers and all that thing, erection of towers is already happening.

So now coming to the guidance, you said that this year, you still believe that you can do the guided number, which was around 20% growth at the top line and at the bottom line. For the 9 months, at least, it doesn't look like they are on track. What gives us the confidence that for the full year, we should be able to do a 20% growth? Should be -- Q4 be much stronger for us?

See, if you see even previous years also, Q4 generally has been heaviest of the all 4 quarters. And Q3 has been slightly muted. Q2 and Q4 are the numbers bringing quarters. So Q4 certainly is going to be better. But if you -- because if you see the 9 months overall number, you will find a trend also, 9 months put together. Q4 is certainly going to make it whatever trend has been going from last 2, 3 years. Q3 is going to be heavier.

Got it. Got it. But generally, Q4 is heavy, so it will come on a high base, but to achieve a 20% growth for the full year, we need to do a significantly higher in the Q4.

Yes. Certainly, yes.

Okay. Just 1 last question to understand the project business margin. It has been quite volatile, right, ranging from decently 6-7% margin earlier now to consistently doing 3%, 4%. Do you think there is a reset in the margin and the new margin should be anywhere between 4% and 5% and the expectation for us?

I think as far as I remember, I've been maintaining margin in 4% to 5% in the last few quarters, so when you increase the volume, certainly, all the work you're not going to get in higher margin, though, actually, we have changed -- slightly changed our strategy also because many times, you have to add value to the product -- project, you should sometimes take a call. Sometimes you need to enter a new sector, you have to take a call. Sometimes there's a very fast turnaround in a project so that your cash flows are supported. You have to take a call. So those -- all those factors certainly matter.

Got it. I am just trying to understand. But this is a new normal, right now?

Yes.

[Operator Instructions] We have the next question from the line of Viraj Mithani from Jupiter Financial.

My question is how are you going to be benefiting from this recent budget proposal of announcement or equipment safety of railways?

Your voice is not very clear.

Am I clear now? Is it clear now?

Better, better.

Yes. So my question is, how are you going to benefit from this budget proposal and safety equipment on the railway safety? So what are the avenues for us in this sector?

Budget is just now presented. So we are also observing what finer details come out. And I think it will be appropriate only after those deliberations happen and we get the final details to react on to that.

And sir, what would be your guidance for this coming -- this year would be -- the next year would be FY '27?

20% growth guidance.

On the sales side and margin side, net margins would be in the range of 7%?

Net margins, yes, you are talking of project margin or you're talking of overall margin?

Overall margin.

Overall margin should be 10% to 11%. EBIT, I'm talking about.

So net would be 5% around, right?

No. I didn't say that. Project will be in the range of 4% to 5%. Telecom is going to be there in the range of 20%, 21%. So overall, it will be somewhere around 10% to 11%. Is that clear?

Yes, sir.

[Operator Instructions] We have the next question from the line of Vishal Periwal from PL Capital.

Sir, in terms of the Telecom services, you mentioned other data center revenue of INR 56 crores this year. So same period last year, this number could have been how much, sir?

Last year?

Yes, sir.

Last year, it was INR 51 crores. Data center -- yes, ICT revenue, others and data center put together. Others was INR 18 crores last year. This year it is INR 15 crores.

Okay. Got it. And similarly, sir, in terms of project services also, can you give a breakup of Indian Railway and others in the revenue?

So railway projects if we talk of it is INR 112 crores this quarter. And other than railways is INR 452 crores.

Okay. And sir, similarly from the same period last year, what's available, sir?

So last year, for the same period, it was INR 123 crores from railway projects. And other than railway projects, it was INR 307 crores.

Okay. Got it. Got it. And the project order book that is there, so in terms of railway and non-railway, can you also provide it?

So railway projects, order book, if I talk of, it is around INR 1,000 crores is from railway stream and then other than railways, [indiscernible]. So INR 5,000 crores is non-railway and INR 1,000 crores -- close to INR 1,000 crores is railways. I'm talking about project income only. It does not include telecom income.

Okay. Okay. So is it fair to say, I think we mentioned order book of -- in the range of INR 8,000-odd crores, so [indiscernible] remaining is telecom.

Yes. So there's telecom income. There is railway signaling projects we have, I would say, I think -- so if we count signaling projects also, so it is INR 1,700 crores, put together and telecom is around INR 400-plus crores from railways. And other than railways also there is telecom. So all put together is INR 8,400 plus crores.

Okay. Okay. Okay. But sir, generally, when we do a breakup railway, non-railway, so telecom is a part of railway, we consider that, right?

See, these are all basically bifurcations, whatever way you want, you can. So project income and telecom income, these are the 2 scenarios. Within the telecom, we generally do not bifurcate into railway telecom and other than telecom. That is not be normal -- normally, we are not taking this way. We are only bifurcating projects, railway and non-railway.

[Operator Instructions] We have the next follow-up question from the line of Viraj Mithani from Jupiter Financial.

Am I audible, sir?

Yes, please.

Sir, recently, you got some school order. What was that? Can you just give some details of it? This was canceled again, but what is our scope in that area would be?

Yes, yes. So you are talking about canceled order, you are talking about new orders?

New order and canceled, both. Bihar, we got some school orders and they are canceled and then we got...

Yes. So there are some -- they are basically education in Bihar, they are working on many fronts. So they are setting up new laboratories in schools. So one project is related to laboratories, setting up of physics, chemistry and biology laboratories. So that is the thing, and we are working, already work is in progress. The other one is basically around smart class. That was around about smart class. We really don't know reasons behind the cancellation, it's because of their own internal decision. But -- so we have not been told also, but they have withdrawn those orders.

And sir, what would be our margins in the smart class business would be what kind of...

It was in the range of 4% to 5% only.

Okay. And sir, we had some hospital project also, which was done on pilot basis. Is there any scope there? -- hospital management.

Which one?

RailTel did some hospital management project, some times ago on a pilot basis.

Hospital management for whom?

On a pilot basis, it was done on the government hospitals. It was done some years ago. So...

No, no. We have rolled out a very huge hospital management information system for Indian Railways. There are more than 700 hospitals and the dispensaries, Railway dispensaries, where we have already rolled out 4, 5 years back. Recently, we have completed for Brihanmumbai Corporation also, which is also a very sizable good amount value of work, again, for the same HMIS. So we have -- I don't remember any POC you are talking of, I just don't.

Maybe it's the same project maybe I was talking about which you're talking about.

Okay. But those are full-fledged projects. They are not POC.

Okay. And their margin is accretive.

Yes, yes.

[Operator Instructions] Thank you very much. As there are no further questions from the participants, we would conclude the call now. On behalf of PL Capital, that concludes this conference. Thank you for joining with us today, and you may now disconnect your lines.

Thank you.

Thank you very much, everyone.