RVNL Q2 FY26: Revenue Creeps Up, But Profit and Margins Take a Hit
RVNL saw a small rise in revenue during Q2 FY26, but profitability dropped notably. The construction and rail-infrastructure company delivered growth in topline, yet rising expenses and weaker operating margin dragged down net profit. The quarter signals steady work flow (orders and execution), but near-term earnings and cash flow remain under pressure, making it a mixed result, with better clarity needed in coming quarters.
*Key Highlights*
* Revenue from operations: ₹ 5,333.36 crore in Q2 FY26, up +3.8% YoY compared with ₹ 5,136.07 crore in Q2 FY25.
* Quarter-on-Quarter (QoQ) growth in revenue: +28.9% (vs Q1 FY26) reflects some recovery from a soft first quarter.
* Total Expenses: ₹ 5,015.00 crore (↑6.0% YoY, ↑26.2% QoQ), showing that cost pressures increased.
* Profit Before Tax (PBT): ₹ 318.36 crore, down ~21% YoY (from ₹ 404.55 crore last year), but up ~94% QoQ (from ₹ 164.04 crore in Q1 FY26).
* Profit After Tax (PAT): ₹ 230.52 crore in Q2 FY26, down ~19.7% YoY (vs ₹ 286.90 crore in Q2 FY25).
* Earnings Per Share (EPS): ₹ 1.10 in Q2 FY26 vs ₹ 1.38 in Q2 FY25 (YoY decline) but up vs Q1 FY26.
* EBITDA: ₹ 216.9 crore (or ~₹ 217 crore), down ~20.3% YoY; margin fell to ~4.2% (from ~5.6% in Q2 FY25).
* Order-book: The company reportedly has an order book worth around ₹ 90,000 crore, which provides 3–4 years of revenue visibility.
*Revenue & Profit Analysis*
RVNL’s topline grew modestly: +3.8% on a year-on-year basis. On a quarterly basis, revenue saw a healthy rebound, mainly due to pick-up in order execution after a muted Q1. But expenses rose faster than revenue, which squeezed operating margin significantly, EBITDA dropped ~20% YoY, and margin compressed to 4.2%. As a result, although PBT increased from Q1, PAT fell nearly 20% compared with the same quarter last year. This suggests cost dynamics and contract mix (more lower-margin EPC work) weighed on profitability, offsetting stable execution and revenue growth.
*Business & Order-Book Position*
RVNL is the infrastructure-arm of Indian railways: building new lines, doubling/tripling tracks, electrification, railway bridges, metro/ urban-rail projects, etc. As of Q2 FY26, RVNL’s order book is around ₹ 90,000 crore, giving it visibility for the next 3–4 years. About half of these are newer, competitively bid contracts, the rest are legacy railway projects. This backlog is a strong positive: it means even if this quarter was weak, RVNL has enough work lined up that can help revenue over the medium term, provided execution remains on track and cost control improves.
*Areas of Concern*
* Operating margin shrinking: falling to ~4.2% from ~5.6% last year. This indicates cost pressures (raw material, labour, project delays, higher overheads) or a shift towards lower-margin contracts.
* Profit drop despite revenue growth: a nearly 20% fall in PAT shows that topline growth alone isn’t enough, profitability depends heavily on project mix and execution efficiency.
* Negative cash flow trend: some reports suggest cash flow from operations turned negative this quarter, which can raise concerns about working capital and liquidity if it persists.
* Market reaction: following the results, RVNL shares dropped around 3%, indicating investor disappointment with margins and profit drop.
*What Could Help Going Forward*
* Better order execution with focus on higher-margin contracts (metro projects, electrification, rolling stock, O&M, etc.) rather than low-margin EPC. RVNL is expanding into such higher-value segments (rolling stock manufacturing, O&M, non-rail infrastructure) which may improve margin profile in future.
* Working capital and cost management: faster project completion, timely billing and collections and lean overhead can help margin recovery.
* Utilising strong order backlog: with ₹90,000 crore orders waiting, consistent execution and disciplined cost control could turn the long-term outlook positive again.
*Conclusion*
RVNL’s Q2 FY26 results are mixed. On one hand, the company continues to secure and hold a solid order backlog, and revenue showed growth, implying that demand and project pipeline remain intact. On the other hand, profitability and cash flow are under pressure, signalling that cost control, contract mix and execution efficiency need urgent attention. RVNL remains a long-term play on India’s rail and infrastructure push, but near-term performance may remain volatile. The stock could bounce back if management delivers on backlog efficiently and restores margins. Until then, the company presents a case of underlying strength with short-term execution risk.
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