RailTel is expecting Rs 10,000 crore of revenue in the next five years

RailTel Corp. of India Ltd. could earn five times its revenue in the next five years, according to Sanjai Kumar, chairman and managing director of the company.

RailTel sees a promising growth opportunity in Long Term Evolution for Railways (LTE-R), where it holds a strong position due to its ownership of optical fibre-based communication. The company also aims to capitalize on the potential of artificial intelligence-based centralized traffic control in railways within the next 2-3 years.

Beyond the railway sector, RailTel has established partnerships with over 250 business associates to undertake diverse projects related to information technology, health education, smart cities, and data centers, as per Kumar’s remarks.

The total size of these projects amounts to Rs 1 lakh crore over the next six to seven years, with Kavach and LTE-R contributing Rs 30,000 crore to this opportunity. On a conservative basis, RailTel has the capacity to seize Rs 4,000-5,000 crore of this opportunity, with a potential to escalate to Rs 10,000-12,000 crore through successful partnerships with OEMs in the Kavach initiative, according to Kumar.

RailTel has also secured a role in the Assam government’s logistics depots due to its expertise in information technology, as highlighted by Kumar.

While RailTel had exclusive rights to lay optic fibre across railway lines, it is now open to other telecommunication companies as well. Maintaining and creating a network of over 61,000 route kilometers of optical fibre cable alongside railway tracks, which RailTel possesses, is a challenging task, Kumar emphasized.

With its numerous opportunities on the horizon, RailTel expects to generate Rs 10,000 crore of revenue in the next five years, as per Kumar’s estimates. The company does not plan to consider any fundraising options for the next two to three years.

The outlook appears promising for RailTel Corp. of India Ltd., as it strategically positions itself for substantial growth across various sectors, leveraging its core strengths and partnerships with key stakeholders.

RailTel results for the quarter ended June 30, 2023
RailTel Corporation of India’s standalone revenue from operations for the quarter stood at ₹463.46 crore, displaying a decline compared to ₹1,963.51 crore in the previous quarter (March 31, 2023).

The total income also decreased to ₹47,835 lakhs from ₹2,00,220 lakhs in the last quarter. However, there was a slight improvement in other income, which reached ₹14.89 crore, up from ₹38.69 lakhs in the previous quarter.

The total expenses for the quarter amounted to ₹42,814 lakhs, higher than ₹1,74,535 lakhs in the previous quarter, leading to a reduced profit from operations before exceptional items and tax at ₹5,021 lakhs (compared to ₹25,685 lakhs).

After accounting for exceptional items, the profit from operations before tax was ₹5,021 lakhs, down from ₹25,479 lakhs in the last quarter. The net profit for the period also experienced a decline, reaching ₹3,746 lakhs from ₹18,908 lakhs in the previous quarter (March 31, 2023). The total comprehensive income for the period stood at ₹3,798 lakhs, down from ₹7,794 lakhs in the last quarter.

The earnings per equity share (EPS) for the quarter were ₹1.17 (both basic and diluted), reflecting a decrease from ₹2.35 (both basic and diluted) in the previous quarter (March 31, 2023).

On a positive note, RailTel Corporation of India secured a significant order worth ₹294.37 crore from the Tamil Nadu State Marketing Corporation Limited (TASMAC) last month. The project involves implementing integrated solutions to enable end-to-end computerization and connectivity of core and support functions of TASMAC for a duration of five years.

The stock currently trades at PER of 8.4 times/7.5 times on FY24E/FY25E earnings per share.

CT Bureau