Future:

Kavach

LTE

AI based centralised traffic control system

Moving into signalising modernisation projects_+ export of such tech: major opportunities: little
trained manpower available

Next 5 years annual revenue 10000 cr

Concall Notes - Feb 2023

Revenue and Financials:

 RailTel declared an interim dividend of INR 1.50 per share, which is 15% of the
face value of the share.
 Consolidated operating revenue for Q3 was INR 454 crores, registering a Q-o-Q
growth of 6%.
 Consolidated income from operations for the 9-month period ending 31st
December 2022, stood at INR 1,260 crores, registering an increase of 16% YoY
basis.
 RailTel posted profit before tax of INR 43 crores during Q3 of financial year
2022-23.
 Railtel Corporation has an order book of around INR 5,000 crores, which
includes taxes.

Expansion and Upgradation:

 RailTel is exploring new sectors like health, education, urban development, and
making continuous endeavors to enter into new sectors with artificial
intelligence, loT, and other technologies.
 RailTel is heavily investing in network expansion and upgradation, and focusing
on developing assets like setting up of 100 edge data centers in various Tier 2,
Tier 3 cities and 5,000 tower infra in various railway premises to PPP mode.
 RailTel has initiated the process for monetizing its station Wi-Fi project, which is
spread across 6,108 railway stations along with partner consortium.
 RailTel aims to leverage 5G technology in providing better services and is
considering to set up more towers in partnership with industry along with its
optical fiber backbone to enable 5G rollout.
 RailTel is exploring international markets also in the areas where it gains
expertise in the domestic market.

Projects and Strategies:

 Railtel Corporation plans to focus on volume growth rather than concentrating

on a small number of projects due to competition in the telecom market.
 The company expects to reach 6 lakh subscribers by FY '23 end.
  The company is pursuing orders in the education sector and video surveillance
system.
 The project division's margins are expected to be 7-8%.
 The company plans to change its strategy to not stick to a number and lose
business.
 The company is discussing with the Ministry of Railways on the aspect of
revenue sharing for services provided using the railway siding.

Debt and Provisioning:

 There are no excess receivables of over 90-120 days.

 The unallocated expenditure net of income item is volatile on a quarter-on-
quarter basis due to ECL provisioning and other income.
 ECL provisioning is not an actual cash loss, and the company makes provisions
based on the debtor's profile.
 The company does not stop its efforts to recover debts, and ECL provisions get
reversed when the money is recovered.
 The company expects to have ECL reversals in the last quarter as they
consolidate their recovery efforts.

Concall Notes - May 2023

Financial Performance:

 RailTel achieved over 2000 Crores total consolidated income during FY2022-
2023, which is an all-time high in the history of the company.
 Consolidated operating revenue of Rs.704 Crores for Q4, registering the growth
of 55% on a quarter-on-quarter basis.
 For FY2022-2023, the company registered a growth of 27% in operating
revenue with a turnover of 1964 Crores.
 The company collected around 85 crores from the VSS order in Q4 and expects
to execute a major chunk of VSS this year.
 The company aims to keep its EBIT margins at 6-7% for projects and 19-20%
for telecom services.
 The EBITDA margins for telecom services were 29% for the quarter and 33%
for the year, while for projects, it was 4% for the quarter and 5% for the year.
 The company currently has an order book worth 4500 Crores, with new orders
of around 1000 Crores received in the last four to five months.
 Project income for the current year is expected to be around 1500 Crores, while
for FY2024 it should be somewhere around 2000 to 2500 Crores.
 The company expects to have a topline of 1500 Crores for FY2024 with a
margin expectation in the range of 5%.

Capex:
  The company has planned a capex investment of the order of Rs200 Crores for
network upgradation, augmentation of data centre capacity, automation
activities among others for the current financial year to further strengthen its vital
infrastructure and capability.
 The capex for this fiscal year will partly go towards network upgradation, data
center augmentation, and large-scale automation in support systems to increase
efficiency and productivity.
 The company speaker clarifies that maintenance is not part of capex but is
considered revenue expenditure.
 The company speaker mentions that around 50 Crores was spent on data
center and Rs.75 Crores each towards network upgradation and automation.

Revenue Model:

 The revenue recognition model for data centers includes various models such
as usage-based and license-based.
 The company has a deal with 3i Infotech for Wi-Fi monetization with a minimum
guarantee of Rs.14 crores per annum and revenue sharing of 40% above the
minimum guarantee.

Order Book:

 The company currently has an order book worth 4500 Crores, with new orders
of around 1000 Crores received in the last four to five months.
 The company's order book is roughly around 4500 Crores and they are targeting
to execute 1500 Crores for this year.

Railway Projects:

 Railway project revenue for the year gone by was 155 Crores while non-railway
project revenue was 619 Crores.
 The company's network expansion along the railway track has multiplied by 10,
providing a good amount of capacity available.
 The anticipated income from Railways for this year and next year is expected to
be 15 to 20% of total income.

Telecom Business:

 RailWire subscriber base is currently 5.21 lakh, up from 4.63 lakh in FY2022.
 Telecom margins were slightly dipping due to maintenance expenditure on
optical fiber maintenance, but the company expects the margins to be similar in
the next year.
 The net subscribers added to RailWire were around 52000 for the full year and
roughly 7000 for Q4.
 The company is targeting to get a revenue number of 1300 to 1400 for FY2024
and a number of 1600 to 1700 for FY2025 from the telecom business.

Guidance:
  The company expects good numbers in Q1 and Q2 based on its order book of
4500+ crores as of March 31, 2023.
 The company is being cautious in bidding for projects where margins are better
to remain in the 6 to 7% bracket.
 The company aims to keep its EBIT margins at 6-7% for projects and 19-20%
for telecom services.
 The company expects to have a topline of 1500 Crores for FY2024 with a
margin expectation in the range of 5%.

Awards and Recognitions:

 The company also bagged many awards and recognitions in FY2023, including
the prestigious SAFA Certificate of Merit for integrated reporting in corporate
governance disclosure 2021.

Accounts Receivable:

 The trade receivables are around 1050 Crores with 700 Crores less than a year
old and around 400 Crores more than a year old.

Conclusion:

 The conference call concludes due to time constraints.

Concall Notes - Aug 2023

Summary:

Financial Performance:

 RailTel achieved a consolidated operating revenue of INR 468 crores in Q1 FY

'24, with a YoY growth of 24%.
 The telecom segment contributed INR 292 crores and the project segment
contributed INR 176 crores in operating turnover.
 Total revenue grew by 25% YoY, reaching INR 483 crores in Q1 FY '24.
 Profit Before Tax increased by 46% YoY, reaching INR 51 crores in Q1 FY '24.
 Profit After Tax reached INR 38 crores in Q1 FY '24, with a YoY growth of 46%.
 RailTel maintains a strong order book of INR 4,500 crores, with new orders of
INR 527 crores received in Q1 FY '24.

Business Strategy:
  The company is focusing on new business opportunities in sectors like
education, MSME, and smart cities.
 RailTel is expanding its IT solutions and is eyeing the signaling modernization
requirement of Indian Railways.
 The company is awaiting decisions on the COD and RDN projects from the
Ministry of Railways.

Revenue Expectations:

 RailTel expects a revenue growth of 10-12% in the telecom services segment

for the full year.
 The company is aiming for a revenue of INR 1,100 crores in the project services
segment for FY '24.
 RailTel is participating in the LTE rollout and Kavach project and expects a
share of INR 4,000-5,000 crores out of the total project value of INR 30,000
crores.
 The company has not provided an update on the revenue addition from the data
center and security operation center projects.

Subscriber Growth:

 RailTel added around 17,000-18,000 subscribers in Q1 FY '24, reaching a total

of 5.32 lakh subscribers.

Guidance:

 The company expects a revenue growth of INR 2,500 crores and an EBITDA
margin of 18-19% for the full year.
**SWOT Analysis of RailTel Corporation:**

**Strengths:**

1. **Strong Network Infrastructure:** RailTel boasts a robust nationwide optical fiber network
spanning over 61,000 km, connecting all major Indian cities. This extensive infrastructure serves
diverse clients, including the Indian Railways, Government of India, and PSUs, catering to their
telecom requirements effectively.

2. **Government Backing:** As a Government of India enterprise, RailTel enjoys a competitive edge

through access to government contracts and funding. Notably, the company has secured a significant
contract to lay a 16,000 km optical fiber network along railway tracks in India.

3. **Diversified Service Portfolio:** RailTel offers a broad spectrum of services, encompassing

telecom services, data center solutions, and cloud computing services. This diversification minimizes
risk and enhances profitability, ensuring resilience in the face of changing market dynamics.

4. **Experienced Workforce:** RailTel benefits from a talented and seasoned workforce with
profound expertise in the Information and Communication Technology (ICT) industry. This skilled
team is instrumental in maintaining the company's competitive edge and driving innovation.

5. **Financial Strength:** RailTel maintains a strong financial position, marked by a consistent track
record of profitability. This financial stability empowers RailTel to invest in emerging technologies and
expand its operations.

**Weaknesses:**

1. **Heavy Government Reliance:** RailTel heavily depends on the Indian Railways, the Government
of India, and PSUs for a significant portion of its business. This reliance leaves the company
vulnerable to fluctuations in government spending and policies, potentially impacting its business
trajectory.

2. **High Fixed Costs:** The ICT infrastructure industry entails substantial fixed costs and capital
investments. This can pose a challenge in competing with private sector counterparts who often have
lower overhead. RailTel, for instance, must allocate substantial resources to lay new optical fiber
cables and establish data centers.
3. **Continuous Upgrades:** The telecom sector demands continuous adaptation and technological
upgrades. RailTel needs to stay at the forefront of innovation, necessitating significant investments.
Presently, the company is investing in the upgrade of its network to 5G.

4. **Competitive Landscape:** The telecom industry is fiercely competitive, necessitating consistent

high performance. Failing to meet quality of service standards could result in the loss of contracts,
potentially impacting RailTel's market position.

**Opportunities:**

1. **Rising ICT Demand:** India's surging demand for ICT services, fueled by factors like expanding
internet access, e-commerce growth, and the adoption of advanced technologies such as AI and ML,
presents a significant opportunity for RailTel. The company can capitalize on this growth by providing
services to e-commerce firms and AI startups.

2. **Government Initiatives:** The Government of India's substantial investments in ICT

infrastructure development, notably the Digital India program, offer RailTel opportunities for
expansion. RailTel plays a pivotal role in initiatives like providing broadband access to all Indian
villages.

3. **New Markets:** RailTel is actively exploring new markets, including the enterprise and
consumer sectors. This diversification strategy aims to reduce reliance on government contracts and
create additional revenue streams, such as offering telecom services to small and medium-sized
businesses.

**Threats:**

1. **Economic Slowdown:** An economic downturn could lead to reduced demand for ICT services,
potentially impacting RailTel's business and profitability.

2. **New Entrants:** The entry of new players into the telecom market, such as Reliance Jio with
aggressive pricing strategies, may intensify competition and exert pressure on RailTel's profit
margins.

3. **Regulatory Changes:** Changes in government regulations concerning tariffs on telecom

services or licensing regimes could negatively affect RailTel's business operations and profitability.
In conclusion, RailTel Corporation leverages its strong network infrastructure, government backing,
and diversified service offerings to navigate a competitive and dynamic market. However, it must
address challenges related to government reliance and fixed costs while seizing opportunities
presented by the growing ICT sector and government initiatives. Careful monitoring of regulatory
changes and competition is vital to maintaining its market position and profitability.