RITES Q1 FY25 earnings call.
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Revenue
₹486 Cr
verified against source
Revenue YoY
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reported change
EBITDA
Pending
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What the record says.
RITES Q1 FY25 results were materially impacted by two major headwinds: export revenue collapse (INR 35 crore to near-zero YoY) and full-quarter impact of revised IR quality assurance rates (INR 25 crore hit). Management acknowledged Q1 as the "bottom of the barrel" but emphasized strong order book growth of 11% in the quarter with ~INR 1,300 crore fresh orders, maintaining the "one order per day" target. The competitive-to-nomination ratio has shifted dramatically to 80:20 in fresh orders versus the historical 33:67, creating structural margin pressure as competitive execution ramps. Management guided for sequential improvement through FY25 with H2 acceleration, driven by consultancy execution and eventual export revenue kick-in from Bangladesh (200 coaches) and Mozambique (10 locomotives). New client diversification in QA (55% non-IR vs 45% IR) and strategic hirings (net +250 employees) represent investments for FY26+ growth. The core risk is margin compression becoming permanent "new normal" as competitive tenders dominate the order book.
Colored figures show movement against the previous available record.
Guidance to track
- Management targets sequential revenue improvement from Q2 onwards with H2 acceleration, aiming to approach last FY levels despite muted Q1. Execution may be affected by monsoon in Q2.
- EBITDA margins expected to "remain in this range" (Q1 levels) with "maybe a little improvement" as export and non-IR QA revenue ramps. Individual stream margins: Consultancy ~40%, Turnkey 2-3% blended.
- Management maintained the target of "one order a day" on an FY basis, having achieved ~0.92 orders/day in Q1. Order inflow of ~INR 3,000 crore in last few quarters versus INR 600 crore in H1 last FY.
- Bangladesh coaches (INR 900 crore): aim to ship first lots by Q1 FY26 with possible slippage into Q4 FY25. Mozambique locomotives (INR 300 crore): target first shipments by Q4 FY25 or Q1 FY26.
Risks flagged
- Competitive tendering now represents 80% of fresh orders versus historical 33%, compressing margins across all revenue streams. Export orders won on global competitive basis carry significantly lower margins than historical Line of Credit tenders.
- While order book grew 11% in one quarter, translating this into revenue requires faster execution. Management cited consultancy projects dependent on ground-level execution progress and monsoon-related Q2 disruptions.
- Full-quarter impact of new IR inspection rates (lower than historical) combined with competitive QA orders from GeM, PM Vishwakarma, and other non-IR clients creating sustained margin pressure in this segment.
- The $80 million Zimbabwe locomotives/wagons order remains off-book pending Afreximbank funding confirmation. Management characterized progress as "moving maybe a little slowly" with no concrete timeline for advancement.
Key quotes
- The performance of Q1 has been muted. The two main challenges which we have been talking about in the past, the dynamics which changed in the inspection of IR business and the export business, this quarter, if you compare Q1 to Q1 YoY, hit us full on.
- Moving forward, margins will be definitely not comparable to the earlier trends. I think this, to my mind, where we are today could be, let's say, the new normal and would be where the margins would settle down in the coming quarters and years.
- We have got INR 3,000 crore orders in the last few quarters vis-à-vis INR 600 crore in the first H1 of last FY. So, it's about five times. And that is what we need to focus on: execution of these orders in the coming quarters.
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