Railtel Q3 Results Review - Rise In Competition; Reduced Margin Guidance: ICICI Securities

ICICI Securities Report

Railtel Corporation of India Ltd.’s Q3 FY23 Ebitda grew 5% YoY to Rs 0.7 billion and was impacted by expected credit loss provision of Rs 210 million. Telecom services revenue growth has been healthy at 16% YoY; however, company has reduced Ebit margin guidance for telecom services to 20-25% (earlier: 25-28%).

Project revenue was disappointing at Rs 4 billion for nine months-FY23 (versus guidance of Rs 10 billion for FY23), and was impacted by lower chip availability. It expects to book Rs 4 billion of revenue from projects in Q4 FY23.

Railtel has seen increased competitive intensity in project business, both from government entities and private companies.

Therefore, Railtel has shifted its strategy from chasing margin-based contracts to volume based which can help in growing absolute Ebit in projects business. The company has cut project business Ebit margin guidance to 7- 8%.

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