For years, RailTel was the public-sector answer to a question nobody asked.
A telecom arm inside Indian Railways, mandated to string optical fibre along tracks, lease bandwidth to whoever cared and remain invisible while doing it.
Then India discovered data.
Suddenly, everyone from Mukesh Ambani to the Adani group wants to be in the data-centre business.
The numbers being thrown around would make any bureaucrat faint: India’s data-centre capacity is expected to grow fivefold to 8 GW by 2030, according to Jefferies. That means US $30 billion of new capex and US $8 billion of annual leasing revenue.
And sitting awkwardly, almost by accident, in the middle of this bonanza is a Public Sector Unit (PSU) that already owns 63,000 km of optical fibre and runs Tier-III data centres.
RailTel, the Navratna nobody noticed, suddenly looks like it belongs in the same paragraph as Reliance Jio, Airtel Nxtra and AdaniConneX.
From train signals to cloud signals
RailTel was set up to modernize railway communication. And now it has morphed into a debt-free telecom-plus-IT integrator that earned Rs 3,478 crore of revenue in FY25, up 35 % year-on-year, with a Rs 300 crore profit.
On paper, that’s small change next to private peers, but the trajectory matters. The telecom services business which includes bandwidth leasing, connectivity, managed network, made Rs 1,363 crore, while the project business (basically digital projects for Railways and other government clients) made Rs 2,115 crore.
In the second quarter of FY26, RailTel reported Rs 951 crore of revenue (up 13% yoy) and Rs 76 crore profit, up more than 5%. The order book is a massive Rs 8,300 crore, up 57% year-on-year, according to its October 2025.
Nearly 78% of these projects are non-Railway. This is a sharp contrast to its origins. This isn’t just a rail telecom story anymore.
More than railways
The company’s project portfolio shows how its identity is changing.
It has digitized 236 railway units through NIC e-Office, implemented Hospital Management Information Systems in over 700 railway hospitals, installed video surveillance at 5,000 stations and provides free Wi-Fi at 6,100 stations, arguably the world’s largest public Wi-Fi network.
But the order book now stretches well beyond Railways: defence networks, smart-city connectivity, coal and mining automation, banking IT and even overseas pilot projects in Jamaica and Ethiopia.
Internationally, RailTel is testing the waters. It’s exploring digital-infrastructure contracts in African and Caribbean countries, with early-stage discussions expected to convert into its first foreign projects by FY27.
All of which points to a deeper shift. RailTel is no longer just digitising railways — it’s wiring up the broader economy. And that timing couldn’t be better.
Why data makes the difference
India’s digital infrastructure is entering a capital-heavy decade. Every megawatt of data-centre capacity in India needs US $4–5 million of investment. Of this, a third goes into electrical and power systems, another fifth into racks and cooling. That means a huge ecosystem. Companies such L&T, CG Power, Hitachi Energy, Voltas, Blue Star benefit from the buildout.
Jefferies expects Reliance, Adani Enterprises and Bharti Airtel to control 35–40 % of India’s capacity by 2030.
Now think about where those data centres must physically sit—close to power sources, fibre and users. Mumbai and Chennai already host 70 % of India’s capacity because of subsea cable landings. But future demand will need smaller “edge” sites deeper inland.
This is where RailTel, of all entities, accidentally has an edge.
It already controls 21,000 km of city access fibre, runs data centres in Gurgaon and Secunderabad and has certified Tier-III infrastructure with a government-approved cloud platform called RailCloud. It is now setting up 102 edge data centres with Techno Electric and a 10 MW facility in Noida through a private partnership.
For decades, the company’s biggest asset which were the rights of way along railway tracks had little commercial use. Now it can monetise that corridor without laying a new inch of fibre.
The macro meets the micro
The macro push is undeniable.
India’s data traffic has grown 30 times since FY17; UPI transactions are up 12 times in five years; and the Digital Personal Data Protection Act, 2023 forces most of that data to be stored domestically. The IndiaAI Mission aims to build a US $1 trillion AI economy by 2035, according to a report by Jefferies. The Union Cabinet has approved a Rs 10,372 crore outlay for the mission over five years.
This is expected to drive demand for high-performance, power-hungry servers.
AI servers consume five-to-six times more power than traditional ones and need liquid cooling. Data centres, in other words, will have to be everywhere. They will have to be connected to everything.
For private players, that means capital and land headaches. For RailTel, it means opportunity. It already has both land (within railway premises) and dark fibre waiting to be lit.
The economics (and the irony)
RailTel’s economics are boring in the best possible way. It’s debt-free, it pays dividends (0.81% dividend yield) and it has no overseas borrowings or leveraged subsidiaries to worry about.
In classic PSU fashion, it remains conservative. The management guided for ~25 % annual growth in FY26. So the first half revenue is up 21%.
Telecom services will likely grow in single digits, but the projects and data-centre business are expected to carry the baton.
The company expects its data-centre and cybersecurity revenues to grow 15–20% in FY26, accelerating thereafter. Management is targeting 30–40% growth in the data-centre business in the medium term, driven by demand for AI workloads, cloud migration and government data localization policies.
That kind of ambition is rare for a PSU.
The risk nobody talks about
There’s still a PSU catch, though.
RailTel can’t price contracts as flexibly as private peers. Its project business margins, at 4–5%, remain thin and volatile. Bureaucratic approval cycles could delay large Railway or defence projects. And dividend expectations from the government mean retained earnings are often limited.
Yet, the combination of no debt, rising non-Railway exposure and steady profitability makes it one of the few state-owned entities that’s actually benefiting from India’s AI and cloud boom, rather than missing it entirely.
Valuation
Railtel’s price-earnings multiple hovers near 35, which, for a PSU, borders on science fiction. Over the past three years, RailTel has delivered 32% compounded sales growth and 23% profit growth, while maintaining a return on equity of 16% in FY25. The management now expects around 25% revenue growth in FY26, supported by a healthy Rs 8,300 crore order book and traction in the data-centre business.
But at these levels, most of that optimism already seems priced in. The market is effectively betting that RailTel can sustain this pace of growth while keeping its balance sheet pristine, a tall order even for a company that’s used to running on tight tracks.
The verdict
The market rarely gives PSUs the benefit of doubt. Yet here’s one that’s debt-free, growing faster than many private peers and sitting on the kind of infrastructure new entrants would need billions to replicate.
The story is not about RailTel becoming the next Amazon Web Services, it won’t. But in an economy where data is the new oil, it already owns the pipelines.
For two decades, RailTel was just another forgotten government telecom company. Now, without really changing its DNA, it has stumbled into relevance.
And that might just be the most PSU thing ever.
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.
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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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