Every few years, the Indian government announces a big bet on infrastructure. Roads, power, ports, each has had its turn.
But off late the spotlight has been firmly on railways and defence.
The numbers speak for themselves. The railway capex has crossed Rs 250,000 crore in recent budgets, with targets around full electrification, faster trains and modern rolling stock.
Defence spending too is rising steadily, pushed by Atmanirbhar Bharat and the need to localise technology.
For decades, this money largely went to the public sector, BHEL built turbines, BEL made radars, HAL assembled jets.
But something is shifting.
A new set of smaller private companies is quietly plugging into these supply chains.
They don’t make the trains or the fighter aircraft. They make the systems and sub-systems that keep them safe and efficient.
One of them is a small/microcap, Concord Control Systems.
Barely listed three years ago, it has begun to find its place in conversations about railway modernisation and indigenous defence.
A steady climb
Concord’s story began in 2011 with battery chargers for railway traction systems.
Hardly glamorous, but it was a foothold. In Indian Railways, credibility depends on approvals from the Research Design and Standards Organisation (RDSO).
Concord kept building that credibility, product by product.
Emergency lighting systems for coaches, brushless fans, couplers, exhaust systems and testing equipment — each addition expanded its reach.
Today, the company operates across five verticals: traction, coaching, locomotives, wayside safety equipment and metro technologies.
The metro vertical was added only last year, through a Transfer of Technology agreement with a German partner. The product is an overhead monitoring system, designed to track catenary wires and reduce maintenance. The market may be just Rs 250 crore by 2030, but for a company Concord’s size, that is a meaningful opportunity.
It has also gone the acquisition route. Advanced Rail Controls, now a wholly owned subsidiary, develops embedded electronics for locomotives. Through other joint ventures, Concord is working on collision-avoidance systems like Kavach and diagnostic tools with IISc Bengaluru.
The numbers that matter
Concord’s financial trajectory since FY21 shows how quickly the company has scaled.
Sales have jumped from Rs 18 crore in FY21 to Rs 124 crore in FY25, a nearly sevenfold rise. Operating profit has risen from just Rs 2 crore to Rs 29 crore over the same period, with margins improving from low teens to above 20%.
The company carries negligible debt.
The story is clear: from a small supplier just four years ago, Concord has emerged as a debt-free, profitable business with the ability to capture a much larger share of India’s railway and defence opportunity.
For a microcap that listed on the SME exchange in 2022, this is not trivial. It suggests the business is moving from being a parts supplier to a systems provider. That shift matters, because systems contracts are stickier and usually more profitable.
Riding the policy wave
Railway budgets are prioritising safety, speed and electrification, while defence spending is tilted towards local suppliers. Concord is positioned to benefit from both by focusing on less visible but critical parts such as distributed power systems, axle counters, wheel monitoring and overhead diagnostics.
One example is the Distributed Power Wireless Control System (DPWCS), branded “Super Anaconda,” which allows multiple freight locomotives to be coupled and controlled as one. With over 13,000 locomotives already in service and 1,200 more added each year, Concord sees a Rs 2,000 crore retrofit opportunity over the next five years.
Another is Kavach, the automatic train protection system. Indian Railways plans to roll it out network-wide, an investment estimated at Rs 40,000 crore. Concord is developing prototypes, has entered the SIL4 (Safety Integrity Level 4) safety certification process and believes it is on track.
All told, the company estimates its addressable market at nearly Rs 47,000 crore by FY30, spread across traction (Rs 550 crore), coaching (Rs 750 crore), metro systems (Rs 250 crore), locomotive electronics (Rs 2,500 crore) and wayside equipment (Rs 43,000 crore). Against FY25 revenue of Rs 124 crore, even a small slice of this market would be transformative.
Thus management has guided for 40–50% annual revenue growth over the next three to five years, with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) margins in the 22–25% range.
The stated goal is to move from being a product supplier to a full solutions provider for the railway industry, while also exploring emerging areas like hydrogen and battery-based systems.
What’s concerning
Growth is the easy part of the story. The more difficult part lies in the details.
What’s concerning is that margins have slipped.
Even as revenue almost doubled, EBITDA margins fell from 26% in FY24 to 23% to FY25. Scale should have helped, but it hasn’t.
Concord attributes this to the integration of Advanced Rail, which is margin dilutive for now. Management says margins will stabilise at 22–25%. Investors will want proof in the next set of numbers.
Another concern is order conversion. An order book of Rs 212 crore looks solid, but the pace at which it can be executed is the real test. Most projects take 12–18 months. Concord insists inflows in FY26 will be significant, but significant is not a number. What matters is whether the backlog continues to build as fast as it is executed.
Kavach is another uncertainty. The opportunity size is huge no doubt. But rivals like HBL Power are ahead. Concord argues this is not a winner-takes-all market. Indian Railways wants multiple vendors. Prototypes are under evaluation and certification is progressing. But delays here could mean missing the first wave of contracts.
Working capital has become a sore spot.
The cash conversion cycle ballooned from 70 days in FY24 to 265 in FY25, as inventory piled up to 216 days and debtors stretched to 110.
Management says this is the price of moving into embedded electronics after the Advanced Rail acquisition. These products need imported components, field installation and commissioning before payments are cleared.
The company insists the balance sheet is still clean, with no debt and any funding needs will be weighed carefully between equity and borrowings.
The most obvious risk is scale. At Rs 124 crore of revenue, Concord is still tiny. Doubling revenue every two years, which management says is possible, sounds exciting. It is also ambitious. Execution bandwidth will be tested.
Why it still matters
Despite these concerns, Concord’s story matters because it is not just chasing tenders. It is positioning itself as a systems player in a policy-driven market. That makes it different from dozens of small suppliers.
The company has built relationships with marquee clients: Indian Railways’ coach factories, metro corporations and contractors like L&T and Siemens. These relationships are not easily replicated. It has also avoided debt, a discipline that reduces risk for investors.
The bottom line
What it offers investors is exposure to two of the biggest policy themes of the decade: railway modernisation and defence indigenisation, through a single microcap. The opportunity is large, from distributed power systems and axle counters to Kavach, with a potential market size of nearly Rs 47,000 crore by FY30.
The risks are just as clear. Execution cycles are long, payments are tied up in working capital and more than 80% of revenue still comes from Indian Railways. Margins have slipped and the stock has already rerated sharply, climbing from about Rs 300 in late 2022 to nearly Rs 2,600 today, with the PE (Price-to-Earnings ratio) multiple stretching beyond 60. Investors are already pricing in years of strong growth, which raises the bar for delivery.
Concord is moving in the right direction. The real test is whether it can turn technology partnerships and a swelling order pipeline into stable, recurring revenues. If it succeeds, the microcap label may not last much longer.
Disclaimer
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
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