ICICI Securities Sets Rs 300 as Target Price for RailTel Corporation of India

Railtel Corporation of India Posts 24.9% YoY Net Profit Growth in Q4FY26

Railtel Corporation of India (Railtel) has reported a net profit growth of 24.9% year-over-year (YoY) in the fourth quarter of fiscal year 2026, driven primarily by growth in telecom services. However, this growth did not translate into an increase in earnings before interest and tax (EBIT) due to a decline in margins.

According to the company's financial results, telecom revenue grew by 25.1% YoY, with the start of revenue booking from the VSS project contributing to the increase. The enterprise segment, on the other hand, continued to face competitive pressure. Notably, the project EBIT margin dipped from 4.4% in fiscal year 2025 to 3.9% in fiscal year 2026.

Revenue and EBIT Margin Comparison

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For fiscal year 2027, Railtel has guided for a revenue growth of 20% and a stable EBIT margin of 11-12%. The company is placing an increased focus on data centre, cyber security, and Aadhaar authentication services. Capital expenditure (Capex) is expected to remain steady at INR 3 billion.

Recommendations

ICICI Securities has tweaked its earnings per share (EPS) forecast for fiscal years 2027-2028 and increased the target price to INR 300, while maintaining an unchanged price-to-earnings (P/E) multiple of 20x. The brokerage firm has also upgraded its recommendation for Railtel to "REDUCE" (from "Sell").

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