Rites Limited Q1FY25 Profit Falls Amid Revenue Dip, Secures ₹1200 Cr Export Order

Company Overview

RITES is a multidisciplinary engineering and consulting firm, renowned as a Navratna and Schedule ‘A’ Central Public Sector Enterprise. It offers customized, diverse, and comprehensive solutions for all transport and infrastructure needs. The business operates in areas such as project design engineering, rolling stock export, turnkey construction, and management consulting, providing services to various industries including roads, metros, bridges, tunnels, green mobility and sustainability, airports, land ports, ropeways, infrastructure and urban planning, ports, harbours, and educational structures. Trusted by customers both domestically and abroad, RITES is essential to the growth and modernization of transportation infrastructure by offering innovative and sustainable solutions.

Products & Services: Locomotives, coaches, wagons, and train sets in narrow, meter, standard, cape, and broad gauges (including semi-high-speed train sets).Management consulting covering many sectors including railways, metros, airports and land ports, highways, ropeways, and urban planning. Services in consultancy, exports, leasing, turnkey, and EPC segments.

Industry Outlook:

The transport infrastructure environment is set to change due to growing economic demands, sustainability requirements, and technical advancements. Smart infrastructure will optimize traffic flow, enhance safety, and improve user experiences through intelligent transportation systems that leverage data analytics and artificial intelligence (AI). Increased semi-high-speed train services and related infrastructure will shorten travel times and improve connections between key urban centres. Infrastructure supporting extensive networks of charging and refuelling stations will accelerate the shift to electric and hydrogen-powered transportation, crucial for reducing the sector’s carbon footprint. Governments are prioritizing infrastructure capital expenditure due to its economic multiplier effect. The Asia-Pacific region plans significant investment in transportation infrastructure to accommodate urbanization and economic growth. Future transportation infrastructure will focus on inclusivity, sustainability, and innovation, with continued investment in next-generation transport technologies to build environmentally friendly, robust, and interconnected systems that enhance connectivity and quality of life. These developments will significantly impact global economic and social evolution.

Q1FY25 Business & Financial Performance:

RITES Ltd. reported sales of Rs 486 Cr in Q1FY25, an 11% decline YoY. This decline was primarily due to poor performance in the exports business and reduced revenue in the quality assurance segment, despite growth in other areas. EBITDA decreased by 34% to Rs 106 Cr YoY, and PAT was Rs 90 Cr, a 24% YoY decrease. EBITDA margins for the company were estimated at 21.8% in Q1FY25, up from 29.6% in Q1FY24 to 27.5%. The decrease in income was linked to lower QA, overseas consulting, and exports for the quarter. Profit decreased due to lower income without a corresponding reduction in expenses. Falling margins were a result of a changed revenue mix in exports and lower consulting profits.

Q1FY25 Financials Result:                                                                                                             (Rs Cr)

Ratio Analysis:

Segment Performance :
RITES recorded sales of Rs 271 Cr (down 11% YoY) in consultancy, Rs 5 Cr (down 87% YoY) in exports, Rs 34 Cr (up 9% YoY) in leasing, and Rs 171 Cr (up 4% YoY) in turnkey during the quarter. Turnkey, leasing, and consulting all had EBITDA margins of 1.2%, 38%, and 40%, respectively. A pickup in the exports segment is anticipated in H2FY25, with the commencement of supply of locos/coaches to Bangladesh and Mozambique.

Healthy Order Book Secured

In Q1FY25, the company received orders worth Rs 1300 Cr—more than one order per day for the quarter. With a robust order book totalling Rs 6,355 Cr, the company can project its revenue for the next two years. Thirty-nine percent of the order book consists of high-margin consulting services. Steady expansion in the domestic and international consulting sectors is anticipated, and additional capital expenditure in the Railways budget for 2024–2025 will further spur the company’s growth. The company also holds export orders worth Rs 1200 Cr, with an expected increase in export revenue in H2FY25.

Concall Highlights:

• As of Q1FY25, the orderbook is valued at Rs 6,355Cr: The division of the order book is as follows:39 percent came from consulting (Rs 2,492 Cr), 37 percent came from turnkey (Rs 2,351 Cr), 19 percent came from exports (Rs 1202 Cr), 3 percent came from leasing (Rs 190 Cr), and 2 percent came from the REMCL segment (Rs 120 Cr). 61% of the projects in the order book are awarded through competitive bidding, with 39% awarded by nomination. The company secured projects totalling Rs 1301 cr in Q1FY25.
• Segment of consulting: In Q1FY25, projects totalling Rs 293 Cr were secured. The sector with the largest revenue and profit margins continued to be consulting, notwithstanding the segment’s depressed margins. Revenue from consulting decreased by 10% in the quarter .At least 40% of the orderbook from the consulting division is expected to remain with the company. Section is dealing with rigid competitiveness than in the past because most new orders are being placed through competitive bidding as opposed to nominations. While Due to a competitive bidding process for newly secured orders, the quarter’s QA business was negatively impacted, and margins decreased.

* Turnkey and Leasing: In Q1FY25, new Turnkey and Leasing projects totalling Rs 54 Cr and Rs 48 Cr were obtained. The business Expect the Turnkey segment’s margin to be between two and three percent.
• Export: The company currently has two export orders: one for the delivery of 200 locomotives to Bangladesh Railways and another for the delivery of 10 locomotives with CFM Mozambique. The two projects have an order value of Rs 1200 Cr. It is anticipated that export revenue will increase in H2FY25. The corporation has put in bids in new regions in an effort to get more export orders. For Zimbabwean orders While Zimbabwean officials are trying to secure finance from Asian sources, the company hopes to receive limited orders.
• REMC business: Due to one-time increased expenses, the company’s revenue in Q1FY25 was Rs 35 Cr, down 18% YoY. revenue from consulting for the RTC procurement in Q1 of FY24. Energy management operations kept growing.
• Capex: For FY25, the company plans to spend between Rs100 and Rs140 Cr. It is a low-investment company.

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