Q1 2027 RITES Ltd Earnings Call Transcript
Key Points
- RITES Ltd (NSE:RITES) reported a YoY revenue growth of 9-10% and bottom-line growth of about 8% in Q1 FY27, with management expressing confidence in achieving substantial growth for the full year.
- The company's order book reached an all-time high of INR9,450 crores, with 128 new orders worth INR2,670 crores secured in Q1, maintaining a strike rate of 1.4 orders per day.
- Export business is gaining momentum, with the first rake of the Bangladesh order (200 coaches) set to ship in Q2, and a new order for nine locomotives to South Africa (worth $35 million) received in July, though not yet in the order book.
- Management maintains a strong margin discipline, holding consolidated EBITDA margins at 22% and PAT margins at 17%, with red lines of 20% EBITDA and 15% PAT on an annual basis.
- The company is exploring new growth avenues, including exporting Vande Bharat trains on standard gauge platforms, and REMCL continues to deliver strong performance with 50%+ PAT margins and a 91% dividend payout.
- RITES Ltd (NSE:RITES) maintains a high dividend payout policy of 90%+, supported by low capex and a debt-free balance sheet, with no expected changes in the near term.
- Export revenue recognition is lumpy, as the first rake of the Bangladesh order was not recognized in Q1, and the full order (10 rakes) will not be completed this fiscal year, extending into FY28.
- Margins are under pressure due to a higher proportion of competitive bidding (70% of fresh orders), increased travel costs, and the impending pay revision, which could impact profitability.
- Turnkey projects, which now constitute about 50% of the order book, have very low margins (1.5-2%), dragging overall profitability, and management is not keen on increasing this mix further.
- Employee costs have risen significantly due to a net addition of 450 employees (from 2,675 to 3,125), and a pay revision is expected to add 8-10% to costs in FY28, pressuring margins.
- The company faces execution challenges in export orders, with delays in the Bangladesh rake dispatch and uncertainty on Mozambique locomotive deliveries, which may start only by end of FY27.
- Management's guidance for export revenue this year is conservative at INR300 crores-plus, indicating that the full potential of the order book will not be realized until next fiscal year.
Good morning, ladies and gentlemen. I'm Karthikeyan, moderator for the conference call. Welcome to RITES Limited Q1 FY27 post results conference call.
We have with us today Mr. Rahul Mithal, Chairman and Managing Director, RITES Limited; Dr. Deepak Tripathi, Director, Technical; Mr. Krishna Gopal Agarwal, Director, Finance and CFO; and Mr. Prem Singh Meena, Director Projects. (Operator Instructions) Please note this conference is recorded.
I would now like to hand over the floor to Mr. Rahul Mithal, CMD, RITES Limited. Thank you, and over to you, sir.
Good morning, everyone. Thank you. Let me start with giving the safe harbor statement. The presentation and the press release, which we uploaded on our website and exchanges yesterday and discussions during the call today may have some forward-looking statements. These statements consider the environment we see as of today and obviously carry a risk in terms of uncertainty because of which the actual
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