1. At a Glance
RailTel’s Q1 FY26 results are like its WiFi at railway stations: available, but not blazing. Revenue ₹744 Cr (+33% YoY), PAT ₹66 Cr (+3.6% YoY, -41% QoQ), and OPM stuck at 16%. The stock at ₹378 trades on high hopes, not high margins.
2. Introduction
Picture a train leaving on time but slowing mid-journey. That’s RailTel this quarter. Revenue zoomed 33% YoY, but profits slammed brakes QoQ (from ₹113 Cr to ₹66 Cr). The Navratna PSU is still building optic fiber dreams across India – but investors want profits, not just kilometers of cable.
3. Business Model (WTF Do They Even Do?)
RailTel is a Government-owned ICT provider with:
- Pan-India optic fiber network along railway tracks (6,000+ stations).
- Projects like BharatNet, NKN, rail signaling.
- RailWire broadband, 5.8L+ users, 4th largest rural ISP.
Revenue streams: project contracts, broadband, data center services.
4. Financials Overview
Q1 FY26 Snapshot:
- Revenue: ₹743.8 Cr (+33% YoY)
- Operating Profit: ₹116 Cr (OPM 16%)
- PAT: ₹66.1 Cr (+3.6% YoY, -41% QoQ)
- EPS: ₹2.06
Verdict: Topline races, bottom line derails.
5. Valuation – What’s This Stock Worth?
At CMP ₹378, RailTel trades at P/E 38. Apply a realistic 25–30x on FY26E EPS ~₹10, the fair value range is ₹250–₹300. Market’s pricing a high-speed train; actual speed feels like an express, not a bullet.
6. What-If Scenarios
- If high-margin contracts kick in: EPS heads towards ₹12–₹13, stock can hold ₹400+.
- If receivables (166 days) balloon: Cash flow jams, valuation derates.
- If capex picks pace: Growth sustained, OPM stable.
- If project delays: Profits stuck on a siding.
7. What’s Cooking (SWOT Analysis)
Strengths: Navratna PSU, pan-India OFC, debt-free, big projects.
Weaknesses: Slow profit growth, high debtor days.
Opportunities: 5G fiber leasing, data center boom, railway modernization.
Threats: Execution risk, pricing pressure, payment delays from govt bodies.
8. Balance Sheet 💰
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 3,349 | 4,050 | 5,161 |
| Net Worth | 1,649 | 1,827 | 2,000 |
| Debt | 42 | 46 | 45 |
| Liabilities | 1,658 | 2,177 | 3,117 |
Debt: negligible, PSU safety intact.
9. Cash Flow (FY21–FY25)
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops | 258 | 284 | 556 |
| Investing | -213 | -203 | -419 |
| Financing | -104 | -79 | -77 |
| Net Cash | -59 | 3 | 60 |
Comment: Operations fund growth, but receivables delay cash joy.
10. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE (%) | 15 | 16 | 16.5 |
| ROCE (%) | 20 | 22 | 21.8 |
| PAT Margin (%) | 10 | 9 | 9 |
| Debtor Days | 195 | 180 | 166 |
High ROE for a PSU, but debtor days are like waiting for an Indian train.
11. P&L Breakdown – Show Me the Money
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 1,957 | 2,568 | 3,478 |
| EBITDA | 379 | 464 | 535 |
| PAT | 188 | 246 | 300 |
Growth solid, margins stuck.
12. Peer Comparison
| Company | P/E | ROE% | OPM% | PAT Qtr Cr |
|---|---|---|---|---|
| RailTel | 38.1 | 16.5 | 14.9 | 66.1 |
| Route Mobile | 18.7 | 14.5 | 10.6 | 58.8 |
| Megasoft | — | -18.5 | — | -4.8 |
RailTel trades at double the P/E of peers – investors love the PSU tag.
13. EduInvesting Verdict™
RailTel Q1 FY26 shows revenue speeding but profits stalling. The OFC and broadband moat is real, the balance sheet is clean, and PSU stability attracts investors. Yet high P/E and slowing margins suggest caution.
A solid train ride – but don’t expect Shinkansen speeds.
Written by EduInvesting Team | 28 July 2025
Tags: RailTel Corporation, Q1 FY26, ₹744 Cr Revenue, ₹66 Cr PAT, EduInvesting Premium
