RITES (RITES) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 was challenging due to execution delays in infrastructure projects, mainly from weather-related disruptions, but sequential revenue grew 11%-16.5% from Q1 to Q2, with a strong order book of ₹6,580-6,581 crore and 90+ new orders worth over ₹700 crore.

• Aggressive order inflow continued, surpassing the entire H1 of the previous year, and export segment broke a multi-year hiatus, securing INR 1,300+ crores in orders.

• Launched VISTAR, an AI-powered rail inspection solution, and signed MoUs with Etihad Rail, NBCC, HUDCO, and NHAI for consultancy and project management.

• Issued bonus shares (1:1) and declared a second interim dividend of ₹1.75 per share for Q2FY25.

• Board approved unaudited results for Q2 and H1 FY25, with financials reviewed by the Audit Committee and independent auditors.

Financial highlights

• Q2FY25 consolidated operating revenue fell 7%-7.1% year-over-year to ₹541 crore; standalone revenue also declined 7.1% to ₹549 crore.

• Q2FY25 consolidated PAT dropped 26% year-over-year to ₹107 crore; standalone PAT fell 27.8% to ₹80 crore.

• H1FY25 consolidated operating revenue declined 8.9% year-over-year to ₹1,027 crore; PAT decreased 30% to ₹195 crore.

• EBITDA margin for Q2 fell below 20%, with PAT margin around 15% on a consolidated basis; H1 EBITDA margin was 18.9%-21% and PAT margin 14.7%-16%.

• Revenue and profit declines attributed to lower Quality Assurance, consultancy abroad, and exports.

Outlook and guidance

• Focus for H2 is on maximizing execution to approach previous FY revenue levels, with Q3 and Q4 expected to deliver the strongest performance.

• FY26 is expected to see double-digit top-line growth, driven by export order execution and continued growth in consultancy and turnkey segments.

• Export segment recovery expected by end of FY25 as locomotive supply resumes, with revenue growth anticipated from new project wins and strategic partnerships.

• Export revenue will begin contributing meaningfully from early FY26, with minimal working capital requirements.

• Management does not perceive any impairment in the value of investment in IRSDC, despite its ongoing closure and liquidation.