1. At a Glance

K&R Rail Engineering posted a meek ₹0.57 Cr PAT in Q1 FY26 — an 82% drop YoY. Revenues down 38%, margins barely hanging at 1.82%. But hey, the company is now debt free. Unfortunately, profits are also nearly free.

2. Introduction with Hook

Imagine a railway EPC company that once had a ₹500 share price and now trades under ₹70.
No, this isn’t a joke — it’s K&R Rail Engineering, a specialist in private railway sidings, electrification, and infrastructure projects.

• Q1 FY26 Revenue: ₹88 Cr (vs ₹240 Cr in Q4 FY25!)
• Q1 PAT: ₹0.57 Cr
• ROCE: 10%, but stock down 86% in 1 year

From hyper-growth to hyper-worry — welcome to India’s most niche infra player.

3. Business Model (WTF Do They Even Do?)

Core focus:

• Laying Private Railway Sidings on turnkey basis
• Engineering, procurement & construction for:
  • Earthwork
  • Civil & bridge construction
  • Track laying
  • Overhead electrification
  • Signaling & telecom

Clients: Industries needing direct rail access (cement, steel, power, logistics)

They’re not building metros. They’re building the “railway inside your factory.”

4. Financials Overview

Q1 FY26

• Revenue: ₹88 Cr
• PAT: ₹0.57 Cr
• OPM: 1.82%
• EPS: ₹0.20

FY25 (Full Year)

• Revenue: ₹696 Cr
• PAT: ₹6 Cr
• OPM: 2%
• ROCE: 10.1%
• ROE: 7.4%

Reality check:
Margins thinner than railway tracks. Profits moving slower than a freight train on a foggy day.

5. Valuation

Market Cap: ₹194 Cr
Book Value: ₹35.2
P/E: 61
P/B: ~1.93

Fair Value Estimate:

• P/E basis (assuming normalized EPS of ₹2–₹3): ₹40–₹75
• Current: ₹68 — not cheap for a company with <2% margins and inconsistent PAT

6. What’s Cooking – News, Triggers, Drama

• Q1 FY26 slump: Revenue -38%, PAT down 82%
• Promoter stake fell from 74% in Sep ‘22 to 44% in Jun ‘25
• No dividend payout despite 3 years of consistent profits
• Dissolution of Dubai subsidiary approved (dormant unit)
• New independent director appointed — governance refresh?

The real action lies in new orders… but none announced this quarter.

7. Balance Sheet

Key Notes:

• Debt-free = ✅
• Reserves rebuilt
• Asset-light model with most infra subcontracted
• High other liabilities — likely advances/payables

8. Cash Flow – Sab Number Game Hai

Observation:

• CFO unknown for FY25
• Past 2 years show erratic cash flows
• FY23 inflow was likely due to raising equity/debt — now reversed

9. Ratios – Sexy or Stressy?

Verdict:
Working capital is manageable. Margins? Still in rehab.

10. P&L Breakdown – Show Me the Money

Trend:
Revenue up, profits flat — thanks to eroding margins.

11. Peer Comparison

Conclusion:
Way smaller. Valuation rich. Needs PAT growth or re-rating won’t last.

12. Miscellaneous – Shareholding, Promoters

• Huge promoter selling = 🚨
• Retail shareholders exploded from 17K → 45K
• No institutional interest
• No dividend
• No buyback
• But… still no debt

13. EduInvesting Verdict™

K&R Rail isn’t a growth train — it’s a station stop.
If you’re betting on railway infra, there are faster engines in the market.
But for deep-value contrarians who like microcaps, zero debt, and niche monopolies in railway sidings — this might be worth waiting at the platform for.

PS: Bring snacks. The turnaround express is running late.

Metadata
– Written by EduInvesting Team | 21 July 2025
– Tags: K&R Rail Engineering, Q1 FY26, Railway Sidings, Infra Stocks, Microcap Engineering