At a Glance
RailTel has started FY26 like an express train on steroids. Revenue ₹758 Cr (+31% YoY), PAT ₹66 Cr (+36% YoY), EPS ₹2.06 (+36% YoY). Order book? A mouthwatering ₹7,197 Cr, with ₹500 Cr of Kavach orders strapped to it. Management promises 25% revenue growth for FY26, while margins chug along at 11–12%. The data center business is about to get its own blockbuster sequel.
Introduction
RailTel Corporation, a PSU that started life laying optical fiber along railway tracks, is now morphing into a telecom, IT, and data center player with projects spanning India and beyond. Think of it as IRCTC’s geeky cousin who secretly builds firewalls and cloud servers while helping trains not crash (hello, Kavach).
Q1 FY26 numbers scream growth, with telecom revenue steady and projects division zooming. The conference call was a treasure chest: management spilled on Kavach timelines, Edge data centers, capex, and international ambitions.
Business Model (WTF Do They Even Do?)
- Telecom Services: NLD, ISP, data centers – predictable cash cows.
- Projects: Railway signaling, Kavach (anti-collision), ICT projects, Smart Cities.
- Edge & Data Centers: Emerging growth vertical with high margins.
- International Business: Still crawling, but management is optimistic.
Essentially, RailTel is an infra-tech hybrid: part telecom operator, part government contractor, part future cloud provider.
Financials Overview
Q1 FY26 Highlights:
- Revenue: ₹744 Cr (Operating) | ₹758 Cr (Total)
- YoY Growth: +31%
- PBT: ₹89 Cr (+34%)
- PAT: ₹66 Cr (+36%)
- EPS: ₹2.06
Segment Mix:
- Telecom: ₹335 Cr (low growth)
- Projects: ₹409 Cr (double-digit growth)
Commentary: Project segment is the revenue engine, while telecom adds steady cash flows. Margins in projects are thin (5%), but railway orders offer better spreads.
Valuation
- CMP: ~₹250 (hypothetical – actual not mentioned here)
- EPS (annualized Q1): ₹8.24
- P/E: ~30 (on CMP ₹250)
- Order Book-to-Revenue Ratio: ~2.5×
Fair Value Calculation:
- P/E Method: EPS 8.24 × fair P/E 22 → ₹181
- EV/EBITDA: Approx EBITDA margin 12%, FY26 EBITDA ₹400 Cr est → EV 12× → ₹200
- DCF: Hard to model (PSU + order volatility).
🎯 Fair Value Range: ₹180–₹220. Current levels price in optimism.
What’s Cooking – News, Triggers, Drama
- Kavach Orders: ₹500 Cr secured, execution starts FY26–27. Certification underway.
- Data Centers: Noida 5MW under development; Edge DC rollouts planned (4–5 units in FY26).
- International Projects: Baby steps now, but a growth lever for FY28+.
- Capex: ₹350 Cr planned for FY26 (data centers & telecom gear).
Balance Sheet
| (₹ Cr) | Mar 23 | Mar 24 | Mar 25 |
|---|---|---|---|
| Assets | 2,471 | 2,702 | 3,411 |
| Net Worth | 2,055 | 2,308 | 2,818 |
| Borrowings | Minimal | Minimal | Minimal |
| Order Book | 7,197 | – | – |
Commentary: Strong order book, negligible debt – a PSU that actually looks financially disciplined.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 598 | 306 | 392 |
| Investing | -122 | -147 | -616 |
| Financing | -79 | -388 | -6 |
Remark: Positive ops cash but heavy investments in infra expansion.
Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE % | 30 | 28 | 19 |
| ROCE % | 30 | 28 | 25 |
| PAT Margin % | 30 | 29 | 29 |
| Debt/Equity | 0.01 | 0.01 | 0.02 |
Commentary: Healthy margins, strong returns, PSU with efficiency? A rare breed.
P&L Breakdown
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 2,161 | 2,283 | 2,387 |
| EBITDA | 643 | 675 | 683 |
| PAT | 467 | 471 | 486 |
Remark: Steady as she goes, with Q1FY26 already on a higher trajectory.
Peer Comparison
| Company | Revenue (₹Cr) | PAT (₹Cr) | P/E |
|---|---|---|---|
| RailTel | 2,387 | 486 | 24.8 |
| Tejas Net | 1,600 | 80 | 55 |
| ITI Ltd | 2,000 | 40 | 70 |
Commentary: RailTel wins on stability, lags on growth multiples.
Miscellaneous – Shareholding
- Promoters (GoI): 74.9%
- Public: 13%
- FIIs/DIIs: 12% combined
No buzz on stake sale yet, but government holding above 75% limits free float.
EduInvesting Verdict™
RailTel’s Q1FY26 was a stellar start, powered by projects and steady telecom revenue. The ₹7,200 Cr order book provides strong visibility, with Kavach as the crown jewel for the next two years. Data centers could be the surprise packet, offering higher-margin growth.
Strengths:
- Solid order book & low leverage.
- Emerging data center business.
- Strong YoY revenue/PAT growth.
Weaknesses:
- Thin project margins.
- PSU overhang limits valuation re-rating.
- Heavy reliance on railway tenders.
Opportunities:
- Scale-up of Edge & Noida data centers.
- More Kavach & Smart City wins.
- International expansion potential.
Threats:
- Delays in project execution (esp. Kavach).
- Pricing pressure in ICT contracts.
- Policy changes on PSU dividends & stake sales.
Conclusion: RailTel is a steady compounding PSU with optionalities (Kavach + data centers). For long-term investors, it’s a safe ride. For traders, it’s a play on order inflow news cycles.
Written by EduInvesting Team | 01 August 2025
SEO Tags: RailTel Q1 FY26, Kavach projects, RailTel earnings, PSU stock analysis, data center growth
