Q1 Results: RVNL’s Performance Takes a Dive Amid Margin Stress

Rail Vikas Nigam Ltd. (RVNL), a leading public sector undertaking of the Ministry of Railways, saw a tough beginning to the fiscal year 2025-26. RVNL experienced pressure on both revenue and profitability during the quarter ended June 30, 2025, portraying a weaker operating environment and margin decline.

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Revenue and Profitability

• RVNL's revenue from operations for Q1FY26 fell 4.1% year-on-year (YoY) to ₹3,908.77crore from ₹4,073.80crore for the same quarter of the last financial year. Total income also declined to ₹4,136.96crore from ₹4,336.75crore during the previous year. The revenue fall indicates slower project execution and perhaps muted order inflow dampening the top line.
• Net profit narrowed significantly by 40%, at ₹134.36crore compared to ₹223.92crore in Q1FY25. EBITDA took a big hit, falling 71% to ₹52crore from ₹182crore last year. EBITDA margin got squeezed, falling more than 300 basis points to 1.4% compared to 4.5% last year. The margin squeeze was due to increased operational expenses and lower other income, besides decreased operating efficiency.
• Profit before tax (PBT) also recorded a significant decline, falling by 42.5% YoY to ₹173.41crore, down from ₹301.61crore, highlighting the broad-based impact across RVNL’s profit metrics.

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Expenses and Other Financial Highlights

Overall expenses were relatively stable, at ₹3,972.92 crores vs ₹4,036.50crore in the previous year. The company's portion of profit from joint ventures increased to ₹9.37crore from ₹1.36crore, providing a small mitigation against the falling standalone numbers. Of note, RVNL disclosed on a regulatory basis receivables from Krishnapatnam Railway Company (KRCL) and adjustments in calculation of interest on delayed payments, which could impact subsequent quarters.

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Subsidiary and JV Developments

During Q1, RVNL formed a new wholly-owned subsidiary, Sabbavaram Sheelanagar Road Development Limited, in Andhra Pradesh. Some key changes occurred in its JV Kinet Railway Solutions, where Metrowagonmash's holding came down and Locomotive Electronic System's holding went up.

Stock Performance and Analyst Take

After the August 12 results announcement, RVNL's stock fell significantly, closing 3.81% lower on the NSE and 4% on the BSE. The stock of the company has now dropped more than 40% in the last year, reflecting the poor financial performance. The analyst sentiment remains subdued with higher 'sell' than 'buy' ratings and the consensus price target set to decline.

Nutshell

RVNL Q1FY26 numbers indicate notable margin squeeze and steep fall in profitability led by elevated costs, declining revenues, and negative operating leverage. Sentiment is still bearish as the market awaits a recovery in operations and an uptick in quarters ahead.