Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RITES Ltd (NSE:RITES, Financial) achieved a record-breaking order inflow of over INR 1,900 crore in Q3 FY25, nearly equivalent to the entire previous fiscal year's total.
- The company has maintained a consistent strike rate of securing one order per day for four consecutive quarters, resulting in an all-time high order book of INR 8,000 crore.
- RITES Ltd (NSE:RITES) is targeting a 20% top-line growth in FY25-26, driven by revenues from consultancy, export, and turnkey projects.
- The company has successfully diversified its client base in quality assurance, with a shift from 60% Indian Railways to 60% non-Indian Railways clients.
- RITES Ltd (NSE:RITES) has established strategic MOUs in the Middle East, opening up new opportunities for growth in rail infrastructure and logistics.
Negative Points
- Year-over-year, RITES Ltd (NSE:RITES) experienced a 15-16% dip in both top-line and bottom-line performance in Q3 FY25.
- Export margins are expected to be significantly lower than the historical 20% due to competitive global tenders.
- The company's revenue from turnkey projects, which have lower margins, is increasing, potentially impacting overall profitability.
- There has been a delay in the execution of the Bangladesh export order, pushing revenue realization to the next fiscal year.
- RITES Ltd (NSE:RITES) faced a hit of INR 200 crore in top-line revenue over the first nine months of FY25, primarily due to a lack of export revenue and reduced quality assurance and turnkey revenues.
Q & A Highlights
Q: When do you see execution picking up, particularly for Turnkey projects, given the robust order flow?
A: The dip year-on-year is due to older turnkey orders nearing completion. Fresh order inflows will start generating revenue from Q4 onwards. We aim for at least a 20% growth in the top line for FY25-26.
Q: What percentage of export orders from Bangladesh and Mozambique will be executed in FY26, and what are the expected margins?
A: We have an export order book of about INR 1,300 crore, with at least 40% expected to be realized in the coming fiscal year. Margins for these orders will be lower than the historical 20% due to competitive bidding.
Q: How is the export pipeline, and can we expect any significant export orders this year?
A: We have maintained a target of securing at least one export order per quarter. We are aggressively bidding in various geographies and expect to continue this trend.
Q: What is the current cash position, and how does it relate to client funds?
A: Our cash balance is about INR 609 crore, separate from client funds of approximately INR 2,600 crore, which are not included in our balance sheet.
Q: With 45% of revenue from turnkey projects, is this the new normal, and how will it affect margins?
A: We aim to keep consultancy revenue above 50%. While turnkey projects have lower margins, we strive to maintain overall EBITDA margins of around 20% and PAT margins of 15-16%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
