Detailed Narrative
Q3 FY25 Performance and 9M Highlights
Texmaco Rail reported a Q3 FY25 revenue of INR1,326 crores, with an EBITDA of INR139 crores, translating to a 10.5% margin. PAT stood at INR76 crores, achieving a 5.8% margin. For the first nine months of FY25, revenue reached INR3,766 crores, with EBITDA at INR411 crores (nearly 11% margin) and PAT at INR210 crores (5.6% margin). The company delivered 2,714 freight cars in Q3, marking a 54.6% YoY growth, and 8,015 freight cars for 9M FY25, a 70% YoY increase, demonstrating strong execution despite operational challenges.
Strategic Corporate Restructuring and Credit Rating Upgrade
The Board approved the merger of Texmaco West Rail Limited (formerly Jindal Rail Infrastructure) with Texmaco Rail & Engineering, an exercise expected to conclude within 6-8 months. Additionally, the Infra-Rail and Green Energy EPC businesses are slated for transfer to a 100% subsidiary via a slump exchange, a process anticipated to take 12-15 months. Management emphasized continuing these businesses for profitable growth. The company's financial strength was recognized with an upgrade of its long-term bank facilities to CARE A and short-term facilities to CARE A1.
Capacity Expansion and Supply Chain Mitigation
The company's steel foundry, currently operating at 48,000 metric tons with approximately 90% captive consumption, is undergoing expansion in Odisha. This new facility is expected to be operational by mid-next year, boosting total finished casting capacity to 80,000 metric tons, targeting both domestic and overseas markets. To address the Q3 wheelset shortage, which caused a slight sequential dip in performance, the railway has permitted the use of imported wheelsets for private wagon manufacturing until April 2026, primarily sourced from China.
Order Book and Market Outlook
Texmaco Rail holds a robust order book of approximately INR7,600 crores, which includes over 11,000 wagon orders and more than INR2,000 crores in the electrical division. The company noted that 2,679 private wagons were delivered in 9 months, representing about 25% of the total, with railways accounting for 75%. Management expressed confidence in continued order inflows, citing the government's consistent rolling stock allocation of around INR46,000 crores and growing private sector investment in infrastructure, mining, and logistics.
Diversification into Passenger Mobility and Exports
The company is strategically entering the passenger mobility segment, having acquired an interior company and secured orders for Vande Bharat sleeper interiors. While not currently manufacturing entire coaches, they are exploring opportunities. In exports, particularly for castings, management sees strong demand from US railroads due for renewals and is gearing up for better numbers, leveraging its global presence and cost-effectiveness to mitigate geopolitical risks and capitalize on potential tariff shifts.
Cost Management and Financial Performance Drivers
Finance costs for Q3 FY25 were INR32.93 crores, marginally up from INR32 crores last year, primarily due to increased interest costs of INR21.2 crores (vs INR18.48 crores in Q2) following the Jindal Rail acquisition. Other expenses also saw a sequential increase from INR27 crores to INR35.98 crores, attributed to initiatives for future growth. Management reiterated its focus on operational efficiencies and cost control across various components of the business to drive future improvements.