Railtel Corporation Of India Limited

Railtel reported a robust start to FY26, with operating revenue growing 33% YoY to INR744 crores and total revenue increasing 31% YoY to INR758 crores. Profit After Tax (PAT) saw a significant 36% YoY rise, reaching INR66 crores. The Project segment was the primary contributor, accounting for INR409 crores of the operating turnover, while the Telecom segment contributed INR335 crores.

The company maintained a strong order book of INR7,197 crores as of Q1 FY26, with INR721 crores in new orders booked during the quarter. Key drivers for new orders include railway projects, particularly Kavach (contributing close to INR500 crores to the total order book), signaling, and tunnel communication. Additionally, state government projects and Smart City initiatives are expected to contribute to future inflows.

Management clarified that the execution of existing Kavach orders, valued at approximately INR500 crores, will span 18 to 24 months, with the majority of revenue expected in FY27 and some extending to FY28. Railtel's role in Kavach is primarily execution, partnering with OEM Quadrant Future Tek, while the system itself was developed by RDSO in collaboration with industry. Certification for these safety-critical projects is underway and will run in parallel with field work.

For the full fiscal year 2026, Railtel anticipates an overall revenue growth of approximately 25%. The company also provided a margin guidance of 11% to 12% for the entire year. While the core telecom market is expected to remain stunted, it serves as a catalyst for the higher-growth project business, which currently operates at a project margin of 5.28% in Q1 FY26, compared to a general 4-5% for IT projects.

Railtel's data center-related income is projected to grow 15-20%. The company plans to begin 4-5 Edge data centers this year, with an expected contribution of around INR10 crores. The Noida Data Center is slated to reach 5 megawatts capacity in the next two years, eventually upgrading to 10 megawatts. The total capex planned for FY26 is INR350 crores, with INR66 crores already spent in Q1, primarily allocated to data center and telecom infrastructure.

The Telecom segment generated INR335 crores in Q1 FY26. Within this, NLD contributed INR151 crores, ISP INR108 crores (including INR84 crores from RailWire and INR24 crores from IP), and data center-related business and others INR51 crores. Despite the segment's growth being 'stunted,' management views it as crucial for catalyzing project business income.

The company reported a reversal of INR3 crores in Expected Credit Loss (ECL) provisions during Q1 FY26. Furthermore, the Comptroller and Auditor General (CAG) provided 'nil comments' on the annual financial results for FY24-25, underscoring the company's strong financial reporting and governance.