RITES Limited Q3 FY26 Earnings Call Summary

Summary

RITES Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 11:00 AM

Event Participants

Executives 3 Dr. Deepak Tripathi (Director Technical & Projects), Mr. Krishna Gopal Agarwal (Director Finance & CFO), Mr. Rahul Mithal (Chairman & Managing Director)

Analysts 8 Anand B, Dixit Doshi, Harshid Kapadiya, Manan Poladia, Parimal Mithani, Raghav Maheswari, Rehan Saiyyed, Shreyans Mehta, Uttam Srimal, Vishal Periwal, Yash Jain

Financials & KPIs

Geographic & Segment Commentary

• International (RITES Videsh): Achieving all-time high order book of ₹2,150 crores. Focus has shifted from Line of Credit projects to global competitive bidding, with two major orders (Mozambique and Bangladesh) won on this basis.
• Consultancy: Maintaining a 70% share of fresh inflow from competitive bidding. Management aims to push growth toward 10% by targeting more international infrastructure assignments and broad-based domestic sectors.
• Turnkey Projects: Revenue grew by ₹60 crores sequentially as new orders entered the 12-18 month execution window. Management expects a double-digit uptick in Q4 as physical execution ramps up at ground level.
• Export: Shipped 4 of 10 locomotives to Mozambique by Q3 end; targeting 4 more in Q4. New developmental orders for “Cape Gauge” converted locomotives for Africa are in the prototype phase for early FY27 shipping.

Company-Specific & Strategic Commentary

• Disruptive Growth Strategy: Management labeled FY27 as a year of “disruptive growth” based on execution of the ₹9,262 crore order book and firing on all four revenue cylinders (Consultancy, Export, Turnkey, Leasing).
• Quality Assurance (QA) Recovery: The business has “hit the bottom” and is returning to FY24 revenue levels by diversifying the client base after the entry of private competitors.
• REMCL Performance: REMCL is operating at 50%+ PAT margins and recently finalized a 1,000 MW RTC tender, totaling 2,500 MW across three tenders for Indian Railways.
• Dividend Policy: Reaffirmed commitment to a high dividend payout policy (historically ~95%), stating the company does not like to “bring surprises” to investors.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Export Margins & Timelines

• Question: Where will export margins stabilize given the shift to competitive bidding? (Raghav Maheswari)
• Answer: Margins will settle in the 12-13% range, as seen in Q2/Q3, which is lower than historical levels but sustainable for global tenders (Rahul Mithal).

Turnkey Execution Lag

• Question: Why hasn’t the large turnkey order book translated into revenue growth yet? (Vishal Periwal)
• Answer: 65% of the ₹4,500cr book is “young” (approx. 1 year old). These projects are now entering the 12-18 month mark where ground execution begins (Rahul Mithal).

Bangladesh Order Status

• Question: Is the Bangladesh coach order safe given geopolitical/country-level relations? (Vishal Periwal)
• Answer: The order is EIB-funded and RITES has already received the advance. Prototypes are approved and first rakes are scheduled for early FY27 (Rahul Mithal).

“Disruptive Growth” Definition

• Question: What does “disruptive growth” in FY27 imply for revenue? (Viraj Mithai)
• Answer: It signifies firing on all cylinders (Export, Turnkey, Consultancy) to surpass previous years and recover fully from the FY25 consolidation phase (Rahul Mithal).

Key Takeaway

RITES Limited reported a steady Q3 FY26, characterized by a record-high order book of ₹9,262 crores and a continued order win rate of 1.5 per day. The company is successfully navigating a structural shift from “nomination-based” to “competitive-bidding” contracts, which currently comprise over 70% of new inflows. While this has led to margin compression in the export segment (stabilizing at 12-13%), the company maintained a strong consolidated EBITDA margin of 24% through a favorable revenue mix. Management is positioning FY26 as a year of double-digit growth and FY27 as a year of “disruptive growth,” driven by the mobilization of Turnkey projects and the commencement of the ₹900 crore Bangladesh coach order. With a healthy international pipeline of ₹2,150 crores and a rebounding Quality Assurance business, RITES remains focused on maintaining its 20% EBITDA “red line” while aggressively scaling execution. Forward growth is contingent on the timely shipment of export rakes and the successful conversion of the young turnkey order book into topline revenue.