RailTel Corporation Secures ₹32.43 Crore Contract from Rajasthan Council of School Education; Q2 Profit Rises 4.7%

RailTel Corporation of India Ltd announced on Saturday, November 1, that it has received a Letter of Acceptance (LOA) from the Rajasthan Council of School Education for a project valued at ₹32.43 crore, inclusive of taxes. This contract involves providing Aadhaar enrolment and updation services and is expected to be executed over a five-year period, concluding on October 30, 2030. The company confirmed that the promoter or promoter group has no interest in the awarding entity and that this is not a related party transaction.

In its second-quarter financial results, RailTel reported a 4.7% increase in net profit, reaching ₹76 crore from ₹73 crore in the same quarter last year. Revenue for the quarter rose by 12.8% to ₹951.3 crore from ₹843.5 crore. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 19.4% to ₹154.4 crore, with the EBITDA margin expanding to 16.2% from 15.3%. However, the company's operating cash flow was negative due to adverse working capital requirements.

The telecom services business also showed healthy growth, with revenue up 9% to ₹367.5 crore and Earnings Before Interest and Tax (EBIT) increasing by 23% to ₹102.5 crore, with an improved EBIT margin of 27.9%.

Impact This new contract win is positive for RailTel, bolstering its order book and showcasing its capability in providing essential IT and enrolment services. The steady growth in its core telecom services business and improved profitability metrics in Q2 indicate operational strength. However, investors will monitor the negative operating cash flow and the profitability of project work services, which are typically low-margin.

Definitions: Letter of Acceptance (LOA): A formal document issued by a client to a contractor accepting their bid for a project. Promoter: The founder or main controlling entity of a company. Related Party Transactions: Business deals between entities that are controlled by the same parties, requiring careful disclosure. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance before accounting for financing and accounting decisions. Operating Cash Flow: The cash generated from a company's core business operations. Working Capital: The difference between current assets and current liabilities, indicating short-term financial health.