Railtel shares gain 3% after winning order from Bangalore Metro

Shares of Railtel Corporation of India (Railtel) gained 3 percent after the company bagged two orders.

At 11:07am on Friday, shares of the company traded 1.7 percent higher at Rs 115.5 on the BSE. The stock had fallen by 10 percent in the past month and 17 percent in the past three months.

The company received work orders from Bangalore Metro Rail Corporation for IT network infrastructure worth Rs 27.07 crore, and a Comprehensive Annual Maintenance Contract worth Rs 6.22 crore per year for five years, extendable to ten years. The period of completion for the work is three months, and the payment will be made in three installments.

“Payment of 10 percent after submission of final design document and as built drawing, 70 percent on delivery of goods and 20 percent after issuance of work completion certificate,” the company said in a regulatory filing.

Catch up on all LIVE stock market updates here

Railtel has been performing well this year, bagging three orders so far in 2023, excluding this order.

In December 2022, the company’s net sales stood at Rs 454.32 crore, up 8.77 percent from December 2021. However, the quarterly net profit in December 2022 was down by 51.6 percent from December 2021. The company has two revenue-generating streams – telecom and project work services. The majority of the revenue comes from telecom services, which grew on a YoY basis, while the other revenue stream suffered a decline.

ICICI Securities pointed out that Railtel has only achieved Rs 4 billion in project revenue in the nine months of FY23, despite guiding for Rs 10 billion in FY23. Project revenue has been impacted by a chip shortage, which has hurt electronic availability, but is now easing.

It believes that Q4FY23 should add another Rs 4 billion in revenue as railway projects are recognised. The company has seen increased competition in project tenders and is now chasing volumes over margins.