RVNL - Rail Vikas Nigam Limited Share Price

In the earnings call for Q3 FY '26, management provided a mixed outlook for Rail Vikas Nigam Limited (RVNL). The company reported a top line of INR 4,936 crores for the quarter, with a profit before tax of INR 359 crores. For the first nine months, RVNL's consolidated revenues totalled INR 14,406 crores and profit before tax was INR 841 crores.

The order book stands at approximately INR 87,000 crores, divided into INR 40,000 crores from railway nominations and INR 47,000 crores from bidding. The company secured new contracts worth INR 1,528 crores over the last nine months and emerged as the lowest bidder for projects totaling INR 3,667 crores. A significant recent achievement includes an MOU with Visakha Port Authorities for infrastructure development.

Management emphasized the commitment to timely completion of ongoing projects, such as the Vande Bharat project (120 train sets) and the BharatNet project, aiming for income generation from the latter within the year. Notably, the first prototype for Vande Bharat is expected by June or July 2026, while the Rishikesh-Karnaprayag project is targeted for completion by December 2028.

Looking forward, RVNL expects a modest growth rate for FY '26, projecting an overall increase of 1-2% in top line, although profits may decline due to the lower margins associated with bidding works. However, for FY '27, management is optimistic about achieving a 10% growth rate in revenues and profits, supported by a diverse order flow and significant investments in infrastructure from the government. The expectation is to maintain an EBITDA margin of around 7%, with a balanced revenue mix from different sectors, including railways, highways, and electrical projects.

Question 1: "How exactly are we seeing the full year for us in terms of the growth rate?"

Answer: Our growth in the top line is challenging as we diversify into bidding works. This year, we expect a growth of about 1% to 2% compared to the previous year. However, we anticipate a decrease in profit, primarily due to lower margins in bidding works. Future prospects look promising for the next financial year, where we aim to perform better.

Question 2: "Can you give some color on order inflow in the last 1-2 quarters and any new opportunities that could boost our order book?"

Answer: In the last quarters, we emerged as the lowest bidder for works worth INR 3,500 crores, with INR 1,500 crores already awarded. Opportunities are abundant, especially after the budget announced increased capital expenditure for railway works. We're optimistic about securing a substantial portion of that budget.

Question 3: "Can you provide insights on our current participation in railway capex and high-speed rail projects?"

Answer: The budget presents vast opportunities, focusing on railway infrastructure improvements. However, for new high-speed corridors, it is uncertain if we will be directly involved, as those are often assigned to specific organizations. Our bidding efforts will continue for any future opportunities.

Question 4: "What is the pipeline for railway orders over the next few years?"

Answer: Over the next three years, we aim to complete INR 40,000 crores worth of railway works, generating approximately INR 10,000 to 11,000 crores per annum. Concurrently, we expect to secure INR 10,000 to 12,000 crores from new bidding works, with continued opportunities across sectors like PSUs and state governments.

Question 5: "What is the current status of the Vande Bharat order?"

Answer: The Vande Bharat project is significant for us, involving 120 train sets. We're currently on track according to our timeline, with the first prototype expected to be delivered by June 2026.

Question 6: "What is the execution status for the INR 40,000 crores nomination-based orders and the INR 47,000 crores bidding-based orders?"

Answer: Both segments are under execution. The works amounting to INR 40,000 crores are progressing according to plan, and similar progress is being made with the INR 47,000 crores from bidding projects, including Vande Bharat and BharatNet, among others.

Question 7: "What is the expected revenue execution cycle for our order book?"

Answer: For the next three years, we anticipate that 50% of our revenue will come from the nomination-based railway works, and the other 50% will derive from bidding projects. This balanced approach will ensure stable revenue flow as we work on various projects.

Question 8: "How do you see growth and margins evolving in FY '27?"

Answer: We expect sustainable growth of about 10% per financial year moving forward. Although this year may experience stagnant growth, the strong order book and increasing infrastructure projects should bolster our overall performance. We also expect a 7% EBITDA margin as we improve our bidding processes.

Question 9: "What sectors do our current orders come from, and how diversified is our order book?"

Answer: Our order book is diversified across sectors: railway orders make up about 45%, road sector 10%, electrical sector 15%, and signaling/telecom works including BharatNet at 15%. Mechanical projects, largely from Vande Bharat, comprise about 7%, along with INR 3,500 crores from international projects. Most orders come from the central government.