RVNL - Rail Vikas Nigam Limited Share Price

In the Q1 FY '26 earnings conference call, management provided a cautiously optimistic outlook for Rail Vikas Nigam Limited (RVNL). The total order book stands at Rs. 1,01,000 crores, comprising Rs. 60,500 crores from contracts won through open bidding and Rs. 41,000 crores from legacy railway projects. The newly won contracts for the quarter were valued at approximately Rs. 1,000 crores, with a total of 96 active contracts.

Management detailed the sector-wise distribution of orders: Rs. 26,000 crores in civil engineering (including metro and highway projects), Rs. 10,900 crores in electrical contracts, and Rs. 14,700 crores in signaling and telecom. Notably, major orders include Rs. 6,800 crores for the BharatNet project and Rs. 8,640 crores for Vande Bharat manufacturing.

For revenue, a modest growth target of around 10% was previously set for FY '26, but management is optimistic about surpassing last year's numbers, citing December 2025 as a potential turnaround point after a subdued Q1. While revenue from railways has decreased by approximately 25%, bidding-related turnover has tripled.

On the margin front, management reported a slight dip primarily due to a increase in other expenses and specific onerous contracts recognized, affecting PAT. It was noted that a one-time expenditure of around Rs. 60 crores due to pre-bid consultancy work impacted margins.

Regarding the Vande Bharat project, the first prototype is expected to roll out by June 2026, with revenue recognition starting thereafter. Management anticipates the regular production of the 120 train sets could deliver revenue in FY '26-27.

Internationally, RVNL aims to secure substantial foreign contracts, targeting bids worth Rs. 30,000-Rs. 35,000 crores this year, hinting at an incremental order book build-up. Overall, management portrays a resilient outlook amid current market challenges.

Q1: Can you share a couple of updates in terms of the order inflow last quarter and how we have closed the order book?

A1: In this quarter, we secured order inflows amounting to approximately Rs. 1,000 crores, contributing to a total of 96 contracts. Our overall order book stands at Rs. 1,01,000 crores, which includes Rs. 60,500 crores from contracts won through open bidding and Rs. 41,000 crores from legacy projects.

Q2: Can you provide a sector-wise split of the order book?

A2: Our order book includes Rs. 26,000 crores from civil engineering, Rs. 10,900 crores from electrical work, and Rs. 14,700 crores from signaling and telecom. Notably, we have significant projects like the BharatNet contract worth Rs. 6,800 crores and a share of Rs. 8,640 crores in Vande Bharat manufacturing.

Q3: How do you see the growth number panning out for the full year given a muted first quarter?

A3: The overall turnover is currently down 3.42%. However, I believe that as our turnover from bidding projects has increased significantly, we will exceed last year's revenue and compensate for the decline from railways, ensuring growth in the latter half.

Q4: Can you elaborate on the margin pressure observed this quarter?

A4: The gross margin has dipped to 13.57%, primarily due to decreased income from MoR. Some onerous contracts yielded losses and additional costs of Rs. 60 crores have impacted our profits before taxes. These include Rs. 20 crores related to BharatNet.

Q5: What is the impact of losses related to the BharatNet order?

A5: We have booked approximately Rs. 20 crores in additional expenses without corresponding revenue. These impacts stem from the costs associated with onerous contracts recognized this quarter.

Q6: Do you expect the revenue mix to improve from the second quarter?

A6: Yes, we anticipate a substantial improvement in the second quarter. Current signs are positive, and we are already ahead in revenue compared to last year due to our bidding projects.

Q7: When will we see profitability from the joint ventures?

A7: We are optimistic about dividends from several JVs this year, especially with traffic improvements. Some JVs have already yielded dividends, while others are expected to follow as traffic and profitability increase.

Q8: What is the status of the Vande Bharat project?

A8: Production for the first prototype is scheduled to start by June 2026, and we expect to recognize revenue once it successfully passes trials. Regular production will begin in Financial Year '26-27, aiming for 6-8 train sets that year.

Q9: How much international orders do you have within the 1 lakh crore order book?

A9: Currently, our international order book stands at around Rs. 4,000 crores, with bids for approximately Rs. 30,000-Rs. 35,000 crores planned this year, indicating a strong focus on expanding our offshore projects.

Q10: What margins do you anticipate for the Vande Bharat train sets?

A10: The pricing has been structured based on established supply chains. We don't anticipate extraordinary profit margins but expect it to align with our original estimates since most supply chains are well established.