Can RailTel Corporation maintain its momentum?

In the complex world of transportation where highways and railways intersect, an important aspect to consider is railway signaling. The system ensures that trains navigate their routes safely, just as traffic lights guide vehicles on the road.

But what is the connection between railway signals and highways? Think of it this way. Railroad signals and traffic lights both share the same goal of keeping things coordinated and safe.

Meet RailTel Corporation of India Limited, a key player in this space. Founded in 2000, RailTel has become the digital backbone of Indian Railways, transforming operations and connectivity. Its role extends beyond railways to communications infrastructure and services.

RailTel’s operations span across a variety of sectors, including telecom infrastructure and data center services. An extensive fiber optic network stretching across the country not only facilitates rail operations, but also serves government and corporate customers.

Financially, RailTel has demonstrated stability and growth, adeptly meeting the challenges of the telecom industry. With ongoing projects aimed at expanding its network and services, RailTel’s future looks promising and it is contributing to India’s digital evolution.

The company’s stock price has risen nearly 190% over the past year. Therefore, in this article, we will take a closer look at RailTel Corporation and examine its sector, financial performance, and future prospects. Discover RailTel’s world where connectivity and innovation meet.

RailTel Corporation Corporate Overview

Railtel, a central public sector enterprise, is an ICT provider with a pan-India fiber optic network and one of the largest neutral telecom infrastructure providers in India. The OFC network includes major towns and cities across the country, as well as various rural areas.

RailTel was founded on September 26, 2000 with the aim of improving the current communications infrastructure for train management, operations and safety. It also sought to generate additional revenue by building a nationwide broadband and multimedia network and installing fiber-optic cables on railway lines.

RailTel’s fiber optic network currently covers over 61000 km of routes and 6108 railway stations in India. The company has access to over 21,000 km of cities across the country.

RailTel has a strategic relationship with the Indian Railways and is working on a number of projects, including IP-based video surveillance systems at stations, provision of mission-critical connectivity services such as ‘e-Office’ services, and implementation of short and long distance connectivity. Supports various organizations within Indian Railways.

RailTel also offers a range of passenger services, including video on demand and Wi-Fi, at major railway stations across India.

Services provided by RailTel Corporation

network architecture

RailTel’s Optical Fiber Cable (OFC) network follows a structured hierarchy consisting of core, distribution and edge layers. Leveraging a variety of technologies, RailTel’s OFC-based communications system ensures high service level agreement (SLA) standards for its customers.

With its robust high-speed network and exclusive Right of Way (RoW), RailTel provides reliable services to its customers. RailTel, a dynamic company, is continuously expanding both technologically and financially to meet the current and future communication and information technology (IT) requirements of the Indian Railways as well as the government and private sectors.

data center services

RailTel has 02 no. Tier-III certified MietY operated data centers in Secunderabad & Gurugram and RailCloud operated by MietY offer Infrastructure as a Service (IAAS), Platform as a Service (PAAS) and Software as a Service (SAAS). RailTel provides the following ICT services:

Data Centers and Managed Hosting: Infrastructure as a Service (IaaS), dedicated hosting, managed services, cloud computing, disaster recovery services, hosted smart cities and e-governance services.

Digital services: Wi-Fi as a service, e-office, hospital management information system, e-bidding/e-auction and IoT-based solutions.

ICT hardware, software and service system integration projects: We carry out ICT hardware implementation, software delivery and digital transformation projects (content on demand, video surveillance systems and railway display networks).

Finance of RailTel Corporation

In FY 2023, Railtel saw significant growth in its revenue, surging 27% to reach ₹1,963.51 crore compared to ₹1,548.45 crore in FY 2022. After analyzing four years from 2020 to 2023, the company recorded a compound annual growth rate (CAGR) of 20%.

On the other hand, net profit declined by 10% from ₹208.94 crore in FY2022 to ₹189.07 crore in FY2023. Cumulative net profit recorded a CAGR of 10.25% over the four years from fiscal 2020 to fiscal 2023.

The decline in profits despite the increase in revenue was due to competitive pricing pressures in the projects business resulting in lower margins in FY23 compared to higher margins when projects were launched on a nomination basis.

In FY23, Railtel maintained favorable financial metrics with return on equity (ROE) of 11.91% and return on equity (ROCE) of 14.90%.

RailTel Corporation’s future plans

future growth plan

RailTel has ambitious plans for future growth across its various business segments. The company is working with state governments to actively pursue opportunities in areas such as the KAVACH train collision avoidance system, 5G network rollout, edge data centers and broadband connectivity projects.

With a strong order book and diversified portfolio, RailTel is well positioned to maintain its growth momentum going forward.

healthy order book

As of March 31, 2024, RailTel’s orders stood at INR 470 billion. The company expects to execute approximately INR 200 billion worth of projects from this order book during the current fiscal.

Additionally, RailTel is targeting an influx of new orders of around INR 400 billion in FY25 on the back of upcoming tenders from Indian Railways, state governments and other sectors. The potential KAVACH project order, estimated to be in the range of INR 5,000 crores to INR 7,000 crores, will further strengthen the order book.

Entering a new industry

RailTel is actively exploring new business areas to drive growth and diversify its revenue streams. One such initiative is partnering with private companies to launch edge data centers.

The company plans to build about 100 small edge data centers across the country, with a total capacity of about 20 megawatts. This entry into the edge data center market is expected to meet the growing demand from government agencies, video streaming platforms, and other businesses requiring low-latency connectivity.

Strategic Partnerships and Collaborations

To strengthen its presence in emerging technologies and expand its global presence, RailTel has established strategic partnerships and collaborations. The company has signed an MoU with Quadrant Future Tech Ltd to actively participate in the KAVACH tender, leveraging the latter’s expertise in this unique train collision avoidance system.

Additionally, RailTel has signed a tripartite MoU with InoviTel and Tsiko Africa Energy and Infrastructure to explore opportunities in telecommunications, rail and other IT/ICT businesses in South Africa and adjoining regions.

conclusion

RailTel Corporation has established itself as a major player in India’s digital infrastructure, leveraging its extensive network to drive innovation in the rail and telecom sectors. With a strong order book, strategic partnerships, and a diverse portfolio, the company appears well-positioned for growth.

But the real test lies in implementing and adapting to new technologies. What are your thoughts on RailTel’s future prospects and its ability to capitalize on the opportunities ahead?

A work written by Nalin Surya S.

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