Indian Railways’ engineering and consulting arm RITES, which saw its order book breach the Rs 9,000-crore mark in Q2FY26, is targeting to step up execution of the projects in a bid to boost its topline. The company has built a strong order book over the past 18 months but the revenue has remain subdued in last two years. In fact, the operating revenue in FY25 saw a 3.2% decline over the previous year.
Order book into revenue growth placement
Rahul Mithal, CMD, RITES told FE that the company is now working on reducing timelines for its projects which will reflect in strong revenue growth in the coming quarters. “We have a large order book which is growing substantially in every quarter. We need to translate it into revenues because in the last two years, the topline hasn’t grown that substantially,” he said.
For an infrastructure firm like RITES, which is currently handling about 700 live projects, the execution varies depending on the nature of work and project stage, which in turn impacts the conversion of order book into actual revenues.
In second quarter of FY26, the company added about Rs 850 crore of orders, taking the total order book to `9,090 crore. It’s now aiming to touch achieve Rs 10,000 crore of order book by the first quarter of FY27.
The company is executing infrastructure projects across sectors such as railways, airports, metros, highways, and buildings. On an average, a project takes about three to four years, but on a case-to-case basis, certain milestones can definitely be expedited, Mithal said.
Three-pronged strategy
To ensure time-bound delivery of projects, RITES has undertaken a three-pronged strategy to identify bottlenecks in its active projects and the emphasis has been given on the quality control and digital integration to minimise time and cost overruns.
“At the ground level, we are closely looking at each step, including design approvals, and necessary clearances. We are also pursuing the executing agency for the early completion of the work. There is always a scope to improve on the delivery timelines.
“Since our revenue is milestone-based, which means that our payments are released as the project progresses, it is necessary that we have our ear to the ground,” Mithal said.
A November report by IDBI Capital said RITES delivered a resilient performance in Q2FY26, reflecting strong execution across its consultancy and export segments, robust profitability, and a solid order pipeline that reinforces long-term growth visibility. “The management expects near double-digit revenue growth in FY26, led by better consultancy and export execution, and a pickup in turnkey projects in second half of FY26,” the report said.
In the exports segment too, the PSU is working to speed up the delivery of locomotives and coaches to its international customers. In November 2023, the company was given a contract to supply 10 diesel locomotives to CFM Mozambique. Four locomotives have already been dispatched while the remaining will be dispatched by the first quarter of FY27.
Mithal said that a rolling stock export order would typically take up to 24 months to complete. But due to closer monitoring and coordination among various entities such as the client, designer, equipment supplier, manufacturer, the company is working on expediting the supply.
“We are not a trader but a design consultant. We customise the rolling stock as per the requirement of the client country, which is usually different from the Indian railway standards. We are already expediting the supply of remaining locomotives to Mozambique, besides pushing for the delivery of coaches to the Bangladesh Railways,” he said
The faster execution of projects not only protects profit margins but also generate repeat orders. The strategy is to optimise the margins, and maintain a steady bottomline growth, Mithal said. Over the past few quarters, RITES has been indicating at maintaining an Ebitda (earnings before interest, taxes, depreciation and amortisation) margin of 20% and PAT (profit after tax) margins of 15%.