RITES FY26 Results: Record Order Book, Export Revival

FY26 Performance Overview:

The company achieved double-digit growth in both revenue and profit for FY26, in line with its strategic roadmap.
Achieved a significant export milestone with INR 300 crore in export income after a gap of nearly two years.
Maintained a steady order inflow rate of approximately one order per day and one export order per quarter.
Despite high execution of INR 750+ crore in Q4 FY26, ended the year with a record-high order book of INR 9,416 crore as of March 31, 2026.

Order Book Composition & Margin Guidance:

More than 50% of the current order book (INR 9,416 crore) is young (12-18 months old) and is expected to generate revenue in FY27.
63% of the order book consists of competitive orders, while fresh order inflow is over 70% competitive.
Management expects margins to decline as these new, lower-margin competitive orders contribute more to revenue mix.
The company has set a red line for margins: PAT margins at 15% and EBITDA margins at 20%, which they commit not to breach.

Business Segment Analysis:

Consultancy Business:

Overall consultancy revenue grew 6% YoY in FY26.
Quality Assurance (QA) vertical within consultancy saw a 16% increase in revenue and returned to FY24 levels.
QA business diversification reduced dependence on Indian Railways (IR) from 55% to approximately 40%, with non-IR elements now constituting about 60%.
The company is currently executing 700+ live consultancy projects.

Turnkey Projects:

Turnkey revenue was approximately INR 200 crore lower than the previous year.
The turnkey order book stands at INR 4,580 crore, with about two-thirds being young projects (1-2 years old).
Management expects turnkey revenue to return to previous levels in FY27 as these projects enter their revenue-generating phase (typically years 2-3 of a 3-4 year project cycle).
The company clarified it is not a construction company but a project management consultancy, with turnkey projects simply representing a different accounting method where the entire project value (including execution costs) is booked as revenue, while their fee remains a percentage of the infrastructure cost.

Export Business:

Executed the entire Mozambique export order of 10 locomotives in FY26.
Current export order book balance is INR 1,750 crore, primarily consisting of 200 coaches for Bangladesh.
First rake of 20 coaches for Bangladesh is in finishing stage, with expected shipment in approximately two months (around July 2026).
After first rake delivery, production rate is expected to increase, with minimum 3-4 rakes targeted for FY27.
Company is also developing converted diesel locomotives (from Indian Railways spare locomotives converted to Cape Gauge) for export to African countries, with first two prototypes ready.
FY27 export execution expected to be "much higher" than FY26's INR 300 crore, though specific quantification will be clearer after Q1 FY27.

REMCL Subsidiary Performance:

REMCL Ltd reported revenue of INR 163 crore (16% growth) and profit of INR 90 crore (19% growth) in FY26.
Paid dividend of INR 42 crore to RITES.
With Indian Railways electrification nearly complete at 100%, future growth will come from:
Renewable energy consultancy orders from other clients
International consultancy orders (first expected in FY27)
Volume growth from existing IR network traffic

Cost Structure & Working Capital:

Other expenses increased in FY26 primarily due to:
Logistics costs for moving 10 Mozambique locomotives (6 moved in Q4)
Warranty provisions related to export order execution
Working capital requirements remain minimal due to the consultancy business model structure.
Travel costs represent a significant expense element given the consultancy nature of business with 700+ live projects domestically and internationally.

FY27 Outlook & Guidance:

Company aims to break all-time high revenue record in FY27 (previous high not specified in transcript).
However, profits are not expected to reach all-time high levels (consolidated PAT peak of INR 571 crore) due to lower margin blend in revenue mix.
Profit growth is expected but specific percentage guidance not provided.
The company maintains its policy of high dividend payout ratio to shareholders.

Market Environment Assessment:

Management does not foresee significant execution risks across its 13 verticals.
No major impact expected from potential government Capex adjustments or macroeconomic headwinds on consultancy business.
Recent order inflows continue across multiple sectors: railways, PSUs, private sidings, highways, ports, bridges, airports (including a recent large airport consultancy order), and shipbuilding cluster from Kandla.

Corporate Participants:

Analyst Participants: