Texmaco Rail

Texmaco Rail reported a Q4 FY26 revenue of INR1,167 crores, marking a 13.3% decline year-on-year. Despite the revenue drop, the company achieved an EBITDA of INR116 crores, with a margin of 10%, reflecting a 120 basis points improvement. Profit after tax stood at INR58 crores, with a 5% margin, an increase of 206 basis points YoY. For the full fiscal year 2026, revenue from operations was INR4,377 crores, a 14% decline from the previous year, with an EBITDA of INR450 crores (10.2% margin) and PAT of INR194 crores (4.4% margin).

The company outlined its 'Texmaco 2.0' vision, aiming to grow its top line at least 2x and achieve mid-teen EBITDA percentages. This strategy involves strengthening its core railway business, synergistic diversification, and venturing into new industries. Key focus areas include enhancing capabilities in product lines, design, and engineering, alongside expanding into EPC projects and railway-related adjacencies to reduce overdependence on the cyclical wagon industry.

In Q4 FY26, Texmaco delivered 2,196 freight cars and the Foundry division recorded a volume of 8,964 metric tons. For the full year, 8,372 freight cars were delivered, and the Foundry division achieved 34,000 metric tons. However, performance was significantly impacted by challenging marketing conditions, global supply chain disruptions, particularly wheel set availability, shipping transportation issues for exports, and the imposition of U.S. tariffs.

Texmaco demonstrated disciplined financial management by focusing on maintaining a strong balance sheet and optimizing costs. Net debt decreased to INR444 crores, and the net debt-to-equity ratio improved from 0.22 in FY25 to 0.18 by the end of FY26. This consistent reduction in debt levels aims to enhance financial stability and support future growth aspirations, with management confident in generating sufficient funds for planned capex.

The company secured a significant INR4,000 crore order from South Africa, including 2,200 wagons, 30 diesel locomotives, and a 15-year maintenance partnership, with delivery scheduled by FY28 end. Other substantial orders from the African continent, such as Cameroon, are expected to contribute to revenue in FY27. Management highlighted a robust long-term demand for 1.5-2 lakh wagons in India, with 25,000-30,000 wagons required over the next 5-7 years, and noted that approximately 70% of its current wagon order book is from the private sector.

As part of its diversification, Texmaco is entering the defense business, with the Board approving INR200 crores in capex for this segment. The company is in advanced stages of technology tie-ups for strategic segments, including autonomous vehicles. While specific details were not disclosed, management expects to see a 'positive step forward' in this area during FY27, with a total capex envelope of INR1,500-2,000 crores for new initiatives until 2030.

Texmaco has launched a global capability center and an AI platform called Invariz.ai, powered by ServiceNow and in collaboration with an American company (a NVIDIA partner). This platform aims to provide commercial AI services focusing on specific portfolios like rail solutions, rail design, CRM, and cost reduction in production. The ultimate vision is for Invariz.ai to be a commercial AI service, leveraging AI to optimize operations and expand into new growth areas.

The company has initiated a new vertical for real estate development, aiming to unlock value from prime land that has become available through operational reorganization. This move is intended to strengthen the balance sheet and utilize assets effectively. Management emphasized that this is not a distressed sale but a strategic development of existing land, with a separate business division created for this purpose.