RailTel Q4 Results Review - MoU With Quadrant Likely To Open Door For ‘Kavach’ Project: ICICI Securities

ICICI Securities Report

Railtel Corporation of India Ltd. has reported mixed Q4 FY24 print with Projects revenue growing strong. Telecom Ebit margin was healthy but telecom revenue growth was muted with depressed Projects Ebit margin of 2.4%.

Railtel remains hopeful of growing revenue and profit by 30% in FY25. This will likely be driven by double-digit telecom revenue growth and execution of projects worth Rs 20 billion. It has signed an memorandum of understanding for Kavach technology with Quadrant Future Tek; and along with LTE Railtel anticipates projects orderbook to surge by Rs 50-70 billion, providing strong visibility for revenue growth. However, in tendering, margin remains uncertain.

We have cut our earnings per share estimates by 3-4% for FY25-26E. We have reduced our target price to Rs 240 (from Rs 250), valuing the stock at FY26E price/earning multiple to 20 times. This implies enterprise value/Ebitda multiple of 10 times for FY26E. Maintain Sell.

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