RITES Q2 FY26 earnings call.
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Revenue
₹549 Cr
verified against source
Revenue YoY
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reported change
EBITDA
Pending
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Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
RITES Q2 FY26 proved a mixed quarter with revenue nearly flat (+1.5% YoY) as a INR 90 crore shortfall in Turnkey execution was offset by stronger Consultancy and first Export revenue in 1.5 years. The company maintained its one-order-a-day strike rate, securing 150+ orders worth INR 850 crore, while the order book reached an all-time high of INR 9,090 crore. EBITDA and PAT margins improved due to favorable revenue mix (higher-margin Consultancy and Export compensating for low-margin Turnkey). The company reiterated guidance to surpass last year's performance with double-digit growth, though Turnkey revenue from the young INR 4,300 crore order book is not expected to materially inflect until H2 FY27 when projects reach ~12-15 months of age. Export revenue has resumed after a long gap with Mozambique locomotives contributing INR 60 crore. Key risks include execution uncertainty in the large Turnkey pipeline, margin pressure from increasing competition in Consultancy, and the ongoing wave of employee superannuation. Management targets maintaining minimum 20% EBITDA and 15% PAT margins as guardrails.
Colored figures show movement against the previous available record.
Guidance to track
- Management aims to achieve at least double-digit top-line growth for FY26, driven by Consultancy growth of 10%+ and Turnkey execution ramping from Q4/Q1. Export revenue will contribute regularly every quarter going forward.
- With 2/3 of the ₹4,300 crore Turnkey order book at 8-10 months age, meaningful revenue contribution expected from latter part of FY27 (Q3 onwards). Execution timeline: projects reach revenue-generating stage after ~12 months.
- Management committed to maintaining minimum EBITDA margin of 20% and PAT margin of 15% as floor levels. Margin expansion seen in Q2 due to favorable mix (higher Consultancy/Export share vs low-margin Turnkey).
- Company stated it will not only match FY25 top and bottom line but exceed them 'by a substantial quantum' in FY26, though Q2 revenue was nearly flat.
Risks flagged
- Management acknowledged that >2/3 of the ₹4,300 crore Turnkey order book is under 1 year old, with revenue typically starting after 12 months. Execution delays could impact the FY26 revenue growth target.
- Chairman acknowledged 'tough competition and tough margins' in the competitive regime, noting QA margins are 'definitely now tougher.' While 30% Consultancy margins are targeted, competitive pressures could compress this.
- Revenue growth heavily dependent on timely execution of large young Turnkey projects. If these projects face delays in approvals, site mobilization, or contractor finalization, the revenue inflection expected in H2 FY27 could be pushed out.
- Company is in the midst of a wave of retirements from the mid-1980s induction cohort. While 300 employees were inducted in H1, many are project-based. Management noted this trend will 'plateau' in 1-1.5 years but could create execution risk if not managed properly.
Key quotes
- We are very clear. We are not a construction company, we are purely a Consultancy company. And the turnkey order book that you also see, it is because it's a method of accounting. Our scope of work and everything remains same of a consultant.
- With this export revenue now kicking in and building up. And as I said, consultancy showing a steady growth of 10%+. As also, the new order book in turnkey will start generating revenue definitely by end of the FY. We should be definitely, at minimum, be able to touch the levels of last year, top and bottom line. But we are definitely aspiring to grow above that, both in top and bottom lines.
- I foresee a bump in the Turnkey revenue beginning from Q4/Q1. More than 2/3 of the Turnkey order book of about INR 4,300 crore is about 8-10 months old. And considering a lifespan of about 3-4 years, the initial designs, etc., approvals, and at the site level, including fixing of the executing agency, the revenue booking normally we have seen starts by the end of the first year.
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