Summary
Texmaco Rail & Engineering Limited - Q3 FY26 Earnings Call Summary Monday, February 09, 2026 05:30 p.m. IST
Event Participants
Executives 3 Indrajit Mookerjee (Executive Director and Vice Chairman), Kishor Rajgaria (Chief Financial Officer), Sudipta Mukherjee (Managing Director)
Analysts 6 Balasubramanian (Arihant Capital), Darshil Jhaveri (Crown Capital), Hari Kumar (Individual Investor), Parvez Qazi (Nuvama Group), Rajesh Bhandari (Nakoda Engineers), Sandeep Mukherjee (SKP Securities), Sucrit Patil (Eyesight Fintrade)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Ops | ₹1,042 crores | Moderation vs last year; driven by wheel set constraints and transient supply disruptions. |
| EBITDA | ₹102 crores | Reflects short-term operating leverage pressures; margins stood at ~9.7%. |
| Profit After Tax | ₹42 crores | Impacted by lower wagon deliveries and fixed cost absorption on lower volumes. |
| Wagon Deliveries | 2,027 units | -20% to -25% YoY; primarily due to ongoing wheel set availability challenges. |
| Foundry Sales | 7,646 MT | Volume impacted by 30% YoY reduction in exports due to US tariff pressures. |
| Order Book | ₹5,661 crores | Robust visibility; includes ₹2,140 cr in wagons and ₹1,800 cr in rail electrification. |
| Gross Debt | ₹800 crores | Managed working capital needs for acquisitions and volume increases. |
| Capex | ₹40 crores | 9M FY26 spend; management guides for ₹75-80 crores total for the full year. |
Geographic & Segment Commentary
- Freight Rolling Stock: Delivered 2,027 wagons in Q3; while Indian Railway remains the primary customer, management is shifting the mix toward private and export markets to counter supply-side constraints.
- Foundry Division: Achieved 25,326 MT in 9M FY26; despite US tariff headwinds, export supply resumed in Q4 with a target to scale from 5,000 MT to 20,000 MT in the medium term.
- Rail & Infrastructure: Rail electrification order book stands at ₹1,800 crores; management expects this segment to turn around and contribute positively by FY27 as legacy contracts are closed.
Company-Specific & Strategic Commentary
- Texmaco 2.0 Strategy: Strategic roadmap to double revenue (2x growth) in 3-5 years by diversifying into propulsion systems, Kavach (safety), and urban mobility.
- Product Innovation: Successfully produced prototypes for Multipurpose Freight (FMP) and Container (CMP) wagons; FMP has already commenced revenue generation.
- Jindal Rail Integration: The acquisition has contributed ₹230 crores in PBT over the last 21 months, providing a niche for specialized automobile and steel wagons.
- ESG Initiatives: Commissioned 10MW solar plant at Raipur and converted Raipur furnaces from LDO to LPG, leading to an ESG rating upgrade to 51 by CRISIL.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 2x Topline | Target to double revenue within 3-5 years through Texmaco 2.0 initiatives. |
| Foundry Exports | 20,000 MT | Moving from historical levels of 5,000 MT as US supply resumes in Q4 FY26. |
| Wagon Capacity | 12,000 - 15,000 units | Current annual capacity including various models for IR and private players. |
| New Segments | FY27 Launch | Entry into passenger coaches, propulsion, and wheel sets expected to materialize next year. |
Risks & Constraints
| Risk | Context |
|---|---|
| Wheel Set Supply | Management noted availability from the government is only at 60-65% of desired performance levels, causing production bottlenecks. |
| Sector Cyclicality | High dependence on Indian Railway tenders; management is diversifying into leasing and private sectors to mitigate this. |
| Geopolitical/Macro | Global turmoil and US tariffs previously impacted foundry exports by 30%, though recovery is expected in Q4. |
Q&A Highlights
Order Book & Tendering
- Question: What is the status of new government wagon tenders? (Balasubramanian)
- Answer: Tenders appear overdue but are expected soon as IR needs to meet a 45% modal share; wheel set issues are not the cause of the delay (Sudipta Mukherjee).
- Question: How much of the order book is dedicated to wagons? (Sandeep Mukherjee)
- Answer: Total wagon value is ₹2,140 crores (4,900 units), consisting of 3,000 IR, 1,400 private, and 600 export units (Kishor Rajgaria).
Strategic Expansion
- Question: What is the plan for entering Metro and Passenger coaches? (Rajesh Bhandari)
- Answer: Planning is underway for FY27; the company has a furnishing unit and design collaboration with Hormann Germany for bogies and coaches (Sudipta Mukherjee).
- Question: What are the “breakaway” businesses mentioned? (Sucrit Patil)
- Answer: Management is exploring iron pellet manufacturing and mining segments to integrate with rolling stock customers (Sudipta Mukherjee).
Financials & Cash Flow
- Question: Why is cumulative cash flow low compared to EBITDA over 6 years? (Sunan Bhunia)
- Answer: Low historical turnover and high working capital needs for acquisitions like Texmaco West/Jindal; operating cash flow will improve as these assets scale (Kishor Rajgaria).
- Question: Was the Jindal acquisition profitable? (Rajesh Bhandari)
- Answer: It has earned ₹230 crores PBT in 21 months after interest costs, validating the synergy (Kishor Rajgaria).
Key Takeaway
Texmaco Rail & Engineering reported a transitional Q3 FY26, with revenue of ₹1,042 crores and 2,027 wagon deliveries, hampered by a 60-65% fulfillment rate of wheel sets from government sources. Despite these supply-side headwinds and a 30% drop in foundry exports due to US tariffs, the company maintained an EBITDA margin of 9.7%. Strategically, the “Texmaco 2.0” vision focuses on doubling the topline within five years by diversifying into high-growth areas like Kavach safety systems, propulsion, and passenger coaches, while leveraging a robust ₹5,661 crore order book. Management expects a stronger FY27 as foundry exports recover toward a 20,000 MT target and legacy infrastructure contracts are replaced by higher-margin projects. The company remains focused on reducing cyclicality by expanding its private leasing business and global design services.
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