RVNL's order book stood at around Rs 900 billion as of Q2 FY26, providing three–four years of revenue visibility. Moreover, Rs 430 billion relates to legacy railway projects, while Rs 460 billion comprises competitively bid contracts.
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IDBI Capital Report
Rail Vikas Nigam Ltd. posted a disappointing Q2 FY26, with weak profitability and cash flow offsetting modest revenue growth. Revenue from operations rose only 1% YoY to Rs 49.3 billion vs Rs 48.7 billion in Q2 FY25 despite a healthy 26% QoQ rebound from the muted Rs 39.2 billion in Q1 FY26.
However, margins deteriorated sharply: Ebitda slipped to an estimated Rs 3.9 billion, translating to a 7.9% margin, down 120 bps YoY as cost pressures persisted and lower-margin EPC contracts formed a greater revenue share.
Profit before tax dropped 27% YoY to Rs 3 billion, while PAT plunged 35% YoY to Rs 1.9 billion, with EPS falling to Rs 0.94 vs Rs 1.45 YoY.
On the positive side, RVNL is expanding into higher-value segments such as rolling-stock manufacturing (Vande Bharat trains), operations and maintenance contracts, and non-rail infrastructure, all of which may improve future margin profile.
Investor sentiment is cautious: strong backlog delivers long-term promise, but near-term execution, mix and cash-flow remain key watch-points.
We maintain our Hold rating and revise our target price of Rs 334.
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