RailTel Q3 Results; Revenue Up but Profits Down from Last Year!

The Central Government-owned RailTel Corporation of India reported its quarterly results for December 2021 on Wednesday, 16 February 2022. The PSU (Public Sector Undertaking) reported 4% less consolidated net profits of Rs. 66 crores against Rs. 69 crores in Q3 FY 20-21. The company’s gross sales for Q3 FY 2021-22 stood at Rs. 417 crores, up from Rs. 410 crores last year.

Shares of RailTel Corporation jumped 2% in early trade on Wednesday as investors felt encouraged by the financial results. On 17 February, they were trading at Rs. 105.45 on the NSE, down 1.03% as of 11:56 AM.

Now, let us take a deeper dive into the particulars of this company and its financials.

About the PSU – RailTel Corporation of India

Incorporate in the year 2000, RailTel Corporation is a Category-I (Mini Ratna) PSU, wholly owned by the Indian Government under the administration of the Ministry of Railways. It is a provider of Information and Communication Technology (ICT) services with one of the largest telecom networks in India.

RailTel Corporation has a pan-India OFC (optical fibre cable) covering numerous cities, towns and rural areas. This is because it has exclusive Right of Way (ROW) along the tracks of Indian Railways. Currently, the OFC network covers a distance of more than 60,000 kilometres and over 6097 railway stations.

The company was set up for modernising the telecom system for train operation, control and safety as well as for creating a nationwide broadband network. Today, it is responsible for a wide variety of services across industries, including telecom infrastructure, telecom network, managed data and system integration services.

Besides providing critical network infrastructure services, RailTel undertakes various projects from the Indian Railways, Central Government and State Governments. It has completed projects like IP based video surveillance, Wi-Fi for passengers, e-Office services and short and long haul connectivity.

RailTel is currently working on several important projects such as:

• National Knowledge Network

• Kerala Fibre Optic Network

• Bharat Net

• Hospital Management Information System

• Supply and installation of routers, switches, servers and firewalls in Haryana

• Optical fibre connectivity project in the North-East

Quarterly Financials of RailTel Corporation of India

For the third quarter of FY 2021-22, RailTel Corporation reported a 24.38% sequential rise in consolidated income to Rs. 474.15 crores quarter on quarter (QoQ). Meanwhile, its profit before tax amounted to Rs. 88.14 crores while profit after tax (PAT) was at Rs. 66.01 crores.

The company’s revenue from operations stood at Rs. 417.69 crores, up from Rs. 417.79 crores in Q3 of previous fiscal. Its total expenditure too increased from Rs. 285.75 crores last year to Rs. 346.85 crores.

For the last 9 months in FY 22, RailTel Corporation generated total revenue of Rs. 1,140 crores, an increase of 17.28%. Its PAT has increased by 34.78% and EBIDTA by 17.82% in the first nine months of the current fiscal from the previous one. This is according to a direct quote from RailTel’s Chairman and Managing Director in the quarterly report.

Take a look at the following table to check RailTel Corporation’s quarterly results for FY 21-22.

Note: All values are in Rs. crores

Recent Developments in the PSU- RailTel Corporation

RailTel Corporation of India has achieved its goal of integrating all 695 hospitals and other medical facilities with Aayushman Bharat Digital Mission (ABDM) in February 2022. The PSU had successfully integrated all medical centres by combining the Hospital Management Information System (HMIS) with ABDM.

In December 2021, Railtel Corporation received a work order for tunnel communication systems from Ircon International. The Rs. 210.77 crores order is for designing, supplying and installing tunnel communication systems in the Dharam-Banihal section of the Jammu Kashmir Rail Link Project. The entire project needs to be completed in a year.

In November 2021, RailTel received an Rs. 22.39 crores order from the Centre of Railway Information. This was to set up 3-Way DR for FOIS (Freight Operations Information System), a management system for Indian Railways’ freight business. The following are some recent orders received by this company:

• Order worth Rs. 14.73 crores from EPFO

• From M/S Ircon International Ltd, order worth Rs. 210.77 crores

• Order from Defence R&D Organisation worth Rs. 68.31 crores

• From KRCL, an order worth Rs. 86.90 crores

• From Indian Railways, order worth Rs. 42.38 crores

Final Thoughts

RailTel Corporation of India is among the largest Indian telecom providers with a PAN-India presence. It is also a key strategic partner of Indian Railways and has completed several key projects of national importance. The company has been profitable since FY 2007 and recorded financial growth even during the Covid-19 pandemic. Hence, one can expect its momentum to continue into 2022.

Frequently Asked Questions

1. Is RailTel Corporation a profitable company?

Yes, RailTel Corporation has continued to be profitable since FY 2007. Since 2008, it has paid dividends every year to shareholders and funded its operations entirely internally since 2013.

2. Did RailTel Corporation open an IPO in 2021?

Yes, RailTel Corporation opened an Initial Public Offering worth Rs. 819.24 crores on 16 February 2021. It was a pure OFS (offer for sale) of 8.71 crores equity shares by the company’s only stakeholder, the Government of India.

3. What was RailTel Corporation’s financial performance for FY 2020-21?

As per its last annual report, RailTel Corporation of India recorded its highest ever consolidated revenue of Rs. 1,411.29 crores in FY 21. It generated net profits of Rs. 142.45 crores, up from Rs. 141.07 crores in the previous year despite the worst effects of the Covid-19 pandemic.

4. What is this company’s plans for the future?

RailTel Corporation has a healthy order book of Rs. 5,400 crores which would translate to profits as it completes various projects. The company is currently focusing on digitisation which would boost its B2B and B2C business. Moreover, it is expanding its network and infrastructure to increase its client base.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.