Good morning, ladies and gentlemen. I'm Karthikeyan, moderator for this conference. Welcome to the Conference Call of RITES Limited to discuss its Q2 FY 2026 Results. We have with us today Mr. Rahul Mithal, Chairman and Managing Director, Dr. Deepak Tripathi, Director of Technical and Director of Projects, Additional Charge, and Mr. Krishna Gopal Agarwal , Director of Finance and Chief Financial Officer. At this moment, all participants are in reserved mode. Later, we will conduct a question-and-answer session.
At that time, if you have a question, please press Star and one on your telephone keypad. Please note, this conference is being recorded, and in the interest of time and fairness to all participants, you are requested to restrict yourselves to one question per participant. If time permits, you may come back in the question queue. Now, I would like to hand over the floor to Mr. Rahul Mithal, Chairman and Managing Director, RITES Limited. Thank you, and over to you, sir.
Morning, l et me start with giving the Safe Harbor Statement. The presentation and the press release which we uploaded on our website and exchanges yesterday, and discussions during the call today may have some forward-looking statements. These statements consider the environment we see as of today and obviously carry a risk in terms of uncertainty, because of which the actual results could be different, and we do not undertake to update those statements periodically. Let me give you a brief overview of the overall performance of Q2, and then I leave the floor open for questions. It's been a satisfying quarter for us.
In terms of the roadmap that we have set for ourselves at the beginning of the FY, if I look at it, five key points. One, we would like to maintain a one-order-a-day strike rate, and we did that. We got 150+ orders totaling to INR 850 crore, which is about 1.6 orders a day. Two, we want to maintain one export order a quarter. We continued to maintain that. We got an order of INR 160 crore for 10 locomotives from South Africa in this quarter. Three, we want to achieve an order book of INR 10,000 crore somewhere down the line, maybe as early as possible by the end of this FY. We are heading in that direction.
We added net to our order book by INR 300 crore, and again reached an all-time high of INR 9,090 crore. Four, we want to do a sequential growth for improved execution so that overall, on an annual basis, we surpass the figures of last year, both top and bottom line. As you see, Q2 sequentially, it's about 12% better than the Q1 in revenue, and PAT and EBITDA are, in any case, much higher. And five, we would like to secure our margins, which, as you see, the minimum baseline of about 20% in EBITDA margins and 15% in PAT margins, we have been above that.
So, in a nutshell, the direction which we had set, the key levers, the key operating points, we are moving in that direction. And the roadmap, as I said, which we had set ourselves in the beginning of the financial year, we are in line with that roadmap, moving to try and definitely surpass last year's performance. So that, in a nutshell, are the opening comments, and I leave the floor open for specific questions.
Thank you, sir. Now, we begin with the question-and-answer session. If you have a question, please press star and one on your telephone keypad. In the interest of time and fairness to all participants, you are requested to restrict yourselves to one question per participant. Time permits, you may join back the question queue. We'll wait for a moment while the question queue assembles. Ladies and gentlemen, to ask a question, please press Star and one on your telephone keypad. The first question comes from the line of Parimal Mithani from Credential Investments, please go ahead.
I'm thankful for the opportunity, and congratulations for a good set of numbers.
Thank you, Parimal. Good morning.
Yeah. Sir, I just wanted to know this i n Consultancy, the margins have grown. Is it now a steady state of margins that we'll have going forward from here?
You see, normally, Consultancy margins remain in the range of about 30 %. We would like to maintain that in a particular quarter. Some low-margin orders may contribute. By and large, on an equalized basis, on an annual, on a long-term basis, those are the range of margins in the Consultancy stream that we would like to maintain. We have been maintaining that, as you've seen, the last three, four quarters. Even if in this competitive regime and tough competition and tough margins, but on an average basis, if you see in the preceding quarters, we've been maintaining about 30% margins in the Consultancy.
Isn't it fair to argue that we'll have better execution in Consultancy going ahead?
Yes. So, in this quarter, in any case, Consultancy and Export is the two segments which have contributed to the overall performance. Turnkey is down by INR 90 crore, a nd this exactly INR 90 crore was compensated by Consultancy and Export. That's why you see the revenue nearly flat, about 1.5% growth only. But because of the change in mix, the INR 90 crore contributed to a higher margin mix, and that's why the EBITDA and PAT margins have gone up. So, Consultancy-wise, this quarter has also been good execution. There has been about a 12% growth, both YoY as well as sequentially, w e'll continue to see better execution.
Okay, sir. Thank you. I'll join back in the queue. Thank you.
Thank you.
Thank you. Next question comes from the line of Raghav Maheshwari from Chanakya Wealth Management. Please go ahead.
Hi, sir. Congratulations on a great set of numbers. Sir, we are seeing improvement in the margins, w e are seeing good growth. Can you show some light upon the top-line guidance?
Yes. So, the top line has been flat, as I mentioned to Parimal, and that's primarily because the Turnkey segment, which contributes to the top line, that about 2/3 of more than 2/3 of the order book is less than a year old. It's about 8- 10 months old, and normally, the execution at the ground level with revenue booking starts by nearly the end of the year, so, quarter three, quarter four, by the time these orders reach a time of about a year, they will start contributing to revenue.
So, even though INR 90 crore has been the hit due to Turnkey, but in terms of bottom line, it resulted in a hit of only about INR 1 crore, INR 1- INR 2 crore, because the Turnkey margins are always in the range of about 1% or 2%. So, Turnkey will grow, and that will grow further. That will add to the top line. And with our continued stress on growth in the Consultancy and Exports, we will see the growth in the top line as we had laid down at the beginning of the FY.
Now, what percentage growth are we looking at? If you can share a number?
So, we are definitely looking at, I mean, it depends on quarter three, quarter four, to what extent we are able to execute, but definitely aiming to see at least about trying to reach somewhere near a double-digit growth. Again, coming months, in terms of execution on the top line, on the Turnkey projects, we'll see that.
Okay. And the last question, what is the average turnaround time for the order book if you can give a bifurcation?
It's a very difficult question to answer with one number because the four streams of revenue have different turnaround times, a Turnkey project takes.
What's the bifurcation?
Yeah. A Turnkey project takes about 3-4 years. An Export project takes anything from 2-2.5 years. Consultancy projects would take anything from 90 days to about 3-4 years if it is linked to the execution of the project.
Understood, sir. Thank you, sir, and all the best.
Thank you.
Thank you. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. Next question comes from the line of Harshit Kapadia from Elara Securities. Please go ahead.
Yeah. Thanks for the opportunity. And sir, congrats on a recovery on the Export side and stable Consultancy growth. My few questions start with, sir, you mentioned some INR 90 crore hit is what you have done in Turnkey. So, that particular revenue would be then booked in Q3? Is that what we'll be able to see when we see the Q3 results?
It may not be 90 exactly because, as I said, these two-three, I mean, more than 2/3 of the Turnkey order book of about INR 4,300 crore is about 8-10 months old. And considering a lifespan of about 3-4 years, the initial designs, etc., approvals, and at the site level, including fixing of the executing agency, the revenue booking normally we have seen starts by the end of the first year.
So, I foresee a bump in the Turnkey revenue beginning from Q4/Q1. While the efforts will be there, and that was my answer to the previous question. Also, and the gentleman was asking regarding the guidance for the top-line growth, we'll see how to, to the best possible, we can extract the Turnkey execution in Q3, Q4. W hich will give us a better idea by the end of Q3 where we are heading in terms of top-line growth.
But definitely, the emphasis on trying to make good by to the extent possible from Consultancy and Export, which was the effort in Q2, would continue in Q3, Q4, while the order size is much smaller, and therefore, they may not be able to fully contribute in terms of equalizing the top line. But definitely, being better margin contributors, they contribute better to the bottom line.
Understood, sir. I have a few more questions, I'll join in the question queue, t hank you.
Right, Harshit. Thanks.
Thank you. Ladies and gentlemen, if you have a question, please press Star and one on your telephone keypad. I repeat, l adies and gentlemen, if you have a question, please press Star and one on your telephone keypad. We have a follow-up question from Harshit Kapadia from Elara Securities. Please go ahead.
Yeah. Thanks for this a gain, on domestic Consultancy side, would you be able to share, sir, how has quality assurance grown within the Consultancy for you? And within domestic Consultancy, any specific area, whether it is related to housing, or rail, or airports, or roadways, what has seen the growth, sir?
Yes, Harshit. One very encouraging trend is that the quality assurance vertical has the tough times which we saw in the last 1.5-2 years. We have been steadily, sequentially improving, increasing, trying to garner new clients. I must say that this has been one of the best quarters in the last 6-7 trailing quarters in terms of reaching not only close to the levels which we were in terms of the revenue.
Yes, margins are definitely now tougher, being more in the competitive environment. In fact, more than 2/3 of the revenue in the quality assurance vertical is coming from the non-IR client base, which shows the diversification which we have been able to do in a span of about 2 years and now generating revenue from those clients. Quality assurance is growing steadily.
Another very good area which is contributing to the Consultancy revenue is, yes, a strong point in terms of rail infra as well as the third-party quality audits that we are doing across various sectors of infrastructure, whether it is the highways or the buildings, various infrastructure. As also, we are getting good PMC contribution for some of the building projects that we are doing. Across sectors, the Consultancy revenue has been contributing and growing. That's why you see about a 10%-12% growth, both YoY and sequentially in Consultancy revenue.
Understood, sir. That's really encouraging. Just a question on exports, sir.
Yes.
Now that we have started seeing exports, what has been the delivery for us? This is for how many locos that we have delivered and how many coaches we have delivered?
The first deliveries have started of the locomotives, the Mozambique order of 10 locomotives. So, in quarter two, we could dispatch two locomotives. And that's when you see the break in the hiatus for about nearly 1.5-2 years. And now, export revenue started generating revenue, export orders. And it will be a steady now in every quarter. In fact, subsequent to that, the next 2 locomotives have also been shipped out in the month of October, and they will contribute to the revenue in Q3. So, we will continue to push 3-4 locomotives.
We are hopeful that these 10 locomotives definitely by quarter one of next year, we should be able to complete this order. The coaches, the coaches are in, as I said, a slight gap in the middle last year for about 4-5 months. That we have picked up now. There are about six types of coaches, which now the designs of prototypes are more or less in the final stage. So, we are hopeful that the prototypes will start getting manufactured. And the first rake, we are definitely aiming to send out by quarter one of next year.
Understood, sir. I have more questions, I'll join in the question queue.
Thank you. The next question comes from the line of Uttam Srimal from Axis Securities Limited. Please go ahead.
Yes, sir. Very good morning, sir, and congratulations on the set of numbers. Sir, my question pertains to our export order book, which is currently around INR 1,541 crore. So, how much execution are we building on in the next two quarters and in FY 2027?
Yeah. Morning. So, the three key elements of this order books are the Mozambique order, the Bangladesh coaches order, and various orders of the in-service diesel locomotives to South Africa. We are definitely trying to complete the Mozambique order by the quarter one. That is, in FY 2026, we should be able to, as I said, 2 locomotives we have booked the revenue in. See, the booking of the revenue happens when the locomotives finally get the Bill of Lading. So, even if they are ready, but only when they get loaded onto the vessel at the Mumbai port, that's when we recognize the revenue.
So, the next 2 locomotives, which were shipped out in October, they will figure in the revenue of quarter three. We are definitely trying to see that about 6-7 locomotives get booked in this FY 2026. The balance definitely by quarter one of FY 2026. As I mentioned regarding the coaches export project order to Bangladesh, these are 200 coaches and seven different types of coaches. The first rake which Bangladesh Railways asked for consists of four types of coaches, where we are at the final stages of getting the prototypes approved.
We are wanting to, hoping that we can get the 4 prototype coaches manufactured and approved by them in Q4 so that the bulk manufacture starts and the first rake of 20 coaches moves out by quarter one. Your specific question regarding FY 2027, once this first rake moves out and the prototypes would have been approved, then I think one rake per quarter would definitely be the aim for FY 2027 for the Bangladesh orders.
Okay, sir. I think I will come back and see.
Yeah. Thank you.
Thank you. The next question comes from the line of Gaurav, an individual investor. Please go ahead.
Hi, sir. Good morning. Congratulations on the good set of numbers and taking my questions. Thank you so much for that. I just have one question. Can you just shed some light on the Bangladesh coaches order and the number of inductions in Q2?
Number of, sorry? Sorry, Gaurav, I didn't get you.
Number of coaches inducted in Q2, the spiky numbers.
No. So, I just mentioned in my reply to the previous question, in the Bangladesh order, there are 200 coaches and 7 different types of coaches. The first shipment we are aiming for a rake of 20 coaches by quarter one of FY 2027. The prototypes are in the stage of final approval and manufacture by quarter four. And once the prototypes are manufactured and approved, the bulk manufacture will start. So, starting from quarter one, definitely the next FY, the every rake consisting of 20 coaches would subsequently be exported. A rake consisting of 20 coaches would go at one time. So, about 10 rakes are the total order for about 200 coaches.
Okay. Thank you. Thank you so much, sir. That's all from my side. Thank you.
Thank you. The next question comes from the line of Viraj Mithani from Jupiter Financial. Please go ahead.
Thank you for the opportunity, sir. Sir, my question is, the order book which we have, the 50% comes of the PMC business, right? So, are we changing our trend?
Morning, Viraj. No, no. See, the breakup of the order book of INR 9,090 crore, INR 9,090 crore, is about INR 4,300 crore Turnkey and INR 2,930 crore Consultancy, Export INR 1,540 crore, and balance is Leasing and R&P. So, we are very clear. We are not a construction company, w e are purely a Consultancy company. And the turnkey order book that you also see, it is because it's a method of accounting. Our scope of work and everything remains same of a consultant.
For example, the most recent order which you saw, we got last week only for the NIMHANS facility at Bangalore, which is about INR 373 crore. Now, our role in that is of a consultant only. It's a question of the accounting that the cost of the total project, including our Consultancy fee, flows through our top line, our balance sheet. Otherwise, we are very clear. We are a consultancy company, w e are not a construction company. So, whether it is the Turnkey order or the Consultancy order, it's a question of only the method of accounting, financial accounting. Our scope of work remains exactly the same.
Okay. And, sir, so with this exchange order kicking in, we'll close the year more or less on the last year level. What will be the guidance for current year and the next year?
Yes, Viraj. We are definitely with the export revenue now kicking in and building up. And as I said, consultancy showing a steady growth of 10%+ . As also, the new order book in turnkey will start generating revenue definitely by end of the FY. We should be definitely, at minimum, be able to touch the levels of last year, top and bottom line. But we are definitely aspiring to grow above that, both in top and bottom lines.
Sir, what's our policy regarding export now? Okay. I join the queue, I join the queue .
Thank you so much. Next, we have a follow-up question from the line of Parimal Mithani from Credential Investments. Please go ahead.
Hello. Can you hear me?
Yes, Parimal. Go ahead.
Sir, I just wanted to know, the MOU that you signed with parties in the Middle East, any certification there? And also, your JV with DNV, can you just highlight if anything meaningful is happening there, sir?
[audio distortion] Okay. Yeah. So, first, your first question first. The MoUs in the Middle East, those have, in a short period of time of less than one year, started giving us gains already. The MoU with Etihad Rail has got us work in Jordan, which we are doing with them. We are also now partnering with them in providing consultancy services by deploying our people and our expertise in their various projects in the Middle East and beyond. And we see, in such a short time, we are able to capitalize on it, and we see huge potential moving forward.
We've already set up an office also in UAE. So, I see this moving forward. The other question regarding the partnership with DNV is regarding the Italcertifer Italy. This is the ISA certification, which we are doing for Vande Bharat coaches for the Indian Railways. That's moving on very. It's been moving successfully. We are doing the ISA certification for manufacture of new Vande Bharat rakes.
Okay, sir, and sir, just last one. In terms of leasing business, do we see any traction going ahead now? Because we're seeing good growth there.
Yes. Leasing business has been substantially growing despite newer players trying to come in and trying to hit the margins. But we are growing sequentially. We've already touched the target of being more than 100+ locomotives of our own, which we are doing leasing, besides doing O&M and leasing of clients' locomotives. So, the way we are getting orders in leasing constantly, this is a growing segment, both in terms of the revenue as well as the contribution to the bottom line.
Okay, sir. Thank you. Thank you very much.
Thank you. Ladies and gentlemen, if you have a question, please press star and one on the telephone keypad. We have a follow-up question from Viraj Mithani from Jupiter Financial. Please go ahead.
Yeah. Yes, sir. My question was, we signed so many MoUs with so many companies. How are you going to help us? We are sending, not really happening there.
Yes, Viraj. All of these MoUs, in some way or the other, under the Umbrella MoU, and it will differ, obviously, from case to case and geography to geography. But as I mentioned to Parimal in the last question, for example, the MoU with Etihad Rail has helped us already expand to new geographies where we had not been. We were primarily operating in Africa, Southeast Asia, Latin America. Now, we have started getting work in the Middle East geography. So, similarly, MoUs in the domestic sector with various entities.
And one MoU, like I mentioned, in the inspection quality assurance vertical, which has helped us jointly do the ISA certification for Vande Bharat rakes. So, similarly, in consultancy, our MoUs with various players, depending on where we end up doing work in a particular bid, in a particular geography, each one of them has different potential. That's why we very carefully enter into strategic MoUs. We recently entered into an MoU last week. You must have seen with the DG Naval Projects in Mumbai. We see a huge. We are already working with them in one or two projects, and we see more potential in that sector.
Okay. And, sir, my question is about our policy on exports now. Till now, speaking in, have we made some goals for Exports as a segment?
Yes. Our goal for Export segment is, one, that we will continue to try and achieve one order a quarter, which we have been doing now for about 7-8 trailing quarters, w e will continue to get that. And normally, the export order starts generating revenue after about 1.5-2 years, about 18 months or so. And that's why you see the first order that we got in early 2024, that has got generated revenue in Q2 now. So, with this, you will see over a period of time.
And one of the objectives is that once now we have a sufficient variety and number of export orders, what we want to avoid is spikes in booking of the export revenue. Like you saw in the last 2-3 years, there was hardly any contribution by the export revenue. Now our aim is that every quarter, you don't see a blank in the export revenue. You see a substantial contribution from the export revenue. So, that's one objective which we will definitely achieve. Now, you'll see that regularly in the coming quarters of revenue from export vertical.
Thank you. Thank you so much, sir. All the best, sir.
Thank you. Thank you, Viraj.
Thank you. Next, we have a follow-up question from Harshit Kapadia from Elara Securities. Please go ahead. Harshit Kapadia, your line is unmuted. Please go ahead and get questions. Sir, there seems to be no response. We have a follow-up question from Raghav Maheshwari from Chanakya Wealth Management. Please go ahead.
So, sir, just a couple of follow-ups on the order intake. We have been maintaining one order a day track record for past many quarters now. To understand a bit upon the competitive landscape, how are we going to maintain that? First question, a nd second is, for that matter, what is the average ticket size of the order that we take?
Raghav, the first question is that as the competitive scenario is evolving more and more, when we set this target about eight quarters back, we were in the range of about 0.6-0.7 strike rate. We had to do a lot of business re-engineering to be able to reach that milestone. We have set a few boundary lines, both in not sacrificing the margin beyond a certain point and not picking up small ticket size orders just for getting number of orders.
With those broad boundary lines in each of the 13 verticals that we have, various sectors, we have now been able to maintain that. If you see, it's not only the number of one order a day. It's also the value. For example, we got in quarter two about 150 orders totaling to INR 850 crore. You could see a net addition in the order book from 30th June to 30th September of INR 300 crore.
So, while the size of the order may vary depending on a particular sector or the nature of work, because as you see, we have four broad streams of revenue. But what we ensure is that we will not pick up, as I said, two red lines. One, ticket size of orders below a certain value just to increase the number of orders. And two, sacrifice the margin and unnecessarily dilute our level of quality in terms of the execution of order that we intend to do.
Can you share that minimum order average value that you would not go beyond?
You see, again, that's a very difficult question to give one number because it varies from each of the different verticals. It varies on the four different streams of revenue where the size of orders can be huge in terms of Export or in terms of Turnkey segment. But in terms of some consultancy, they could be small orders. In consultancy, there are three, four different types of work that we do.
We could do a DPR, which is again a smaller value order. It could be a PMC, where it's a percentage-based order where your value depends on a percentage of the infrastructure work. Or it could be a third-party audit, TPI, third-party inspection of a completed infrastructure project. So, again, to give one number would be a misnomer. But yes, for each of the different verticals, as well as for each of the different scope of work, we have set some internal red lines both in terms of the ticket size as well as the margins that we sacrifice.
Understood, sir. Okay sir, t hank you so much, sir. That's it from my side.
Thank you.
Thank you. Next, we have a follow-up question from Gaurav, an individual investor. Please go ahead.
Hi, sir. Thank you again for taking my question. I just wanted to know about the number of employees. Last year, it was around in the range of 2,700 and now increased to 2,800+ . So, where do you see this number going and what were the additions in H1?
So, yes, we are at about 2,800. And we are considering that our order size is constantly increasing. In H1, if you want you to combine, we have inducted about 300 people. And you would see that only there's a net increase of roughly about 100 because a large number of superannuation have also been happening. Because considering that we are about 51 years old, there was a huge induction in the company in its initial years in the mid-80s when the company was diversifying, growing in its first decade.
And those are the large number of employees which are now, in the span of 3-4 years, superannuating after completing about 30- 35 years of service. So, while there is a large number of superannuation, we are inducting in a big way so that net you can see an increase. This trend of superannuation will plateau down after about maybe a year or a year and a half or so.
However, our induction is going to continue both for our project-based employees, which as we get more and more orders, we are inducting employees on a specific project. This number overall, which includes both our regular employees and project-based employees, will go on increasing, as you see, in every successive quarter.
Thank you, sir. Thank you. That's it from my side. Thank you.
Thank you. Next, we have a follow-up question from Harshit Kapadia from Elara Securities. Please go ahead.
Yeah. Hi. Sorry, sir, I missed the call last time. So, just wanted to check, where are we on the export order inflow, sir, which we have been targeting one order a year?
Harshit, in fact, it's one order a quarter. We had set ourselves a target of one order a quarter, eight quarters back. And we are maintaining that. And this quarter also, we got that one order. This is 10 locomotives to South Africa, in-service locomotives at about INR 160 crore. So, we had set ourselves a target at the beginning of 2024 of trying to get one export order a quarter. And we are maintaining that successively for about 7-8 trailing quarters now.
Okay. And for, let's say, second half also, you expect some of the other announcements to come, and our target is largely Middle East and Africa as our market, sir?
In terms of export of rolling stock, it is primarily Africa and Southeast Asia, and as I said, all our efforts are on to maintain one export order a quarter, and that is the basic reason, as I mentioned a few questions back. It's very important to have a diversified large number of orders in the export order book so that they are at different stages of execution, and this spike of revenue generation from the Export segment, which we suffered in the last 2-3 years.
There was a gap, if you see. We will now be able to ensure, and that's the strategy, that every quarter you see some contribution. This being the first quarter after a long gap that you saw an export revenue of 60 crore, but now, on a regular basis, every quarter, we should be able to have a contribution from the export revenue. That is only possible if you have a large number of export orders in different geographies at different stages of manufacture and execution.
All these are competitive bidding as in global competitive bidding, or are these on nomination business, sir?
Most of them were on competitive bidding, but some of these, which were the South Africa in-service locomotives, these were on nomination bidding because we have this is a proprietary kind of work. We took a lot of initiative in trying to finalize a design of trying to use the in-service locomotives, which Indian Railways has a large number of diesel locomotives now, which are available because of electrification.
How best to modify them to the gauge and customize them to the requirement of South Africa and be able to get the designs modified and approved by them and export to them, so these are a very kind of a proprietary design-specific work, which we are working on, and we've got some orders on that from South Africa, but the bigger orders from Mozambique and Bangladesh were all competitive.
Fair enough, sir. I have a few more questions, I'll join the queue.
Yeah.
Thank you. Next question comes from the line of Anand B from KSEMA Wealth. Please go ahead.
Sir, can you hear me?
Good morning, Anand. Go ahead.
I just want to know the margins that you earn, differentiate between, let's say, margins that you earn from Consultancy orders, margins that you earn from Export, margins that you earn from Turnkey. Can you just give a break-up of that?
Yes. So, the margins traditionally in the Consultancy are the highest. They are in the range of 30%. The Turnkeys are always lower. They are about 1.2%-1.1%. And Export, because this is the first order, the first quarter that the revenue has been booked.
So, while this is in the range of about 10%, and this is the kind of range, maybe it'll be a better picture as revenues flow in over two, three successive quarters because the cost booking and the revenue, etc., will equalize and we'll be able to get a better idea of the margins. But these are the broad bands in terms of Leasing, our margins have always been in the range of about 30%. So, these are the four broad segments of margins. As you see, the large range from Turnkey to Consultancy to Export to Leasing.
Okay, a nd final question. What sort of revenue division that you see between these 4 key segments this year and next year as well?
As I mentioned, the turnkey is they're all young order books. So, while this quarter, you've seen a very low contribution from turnkey, this will start growing by quarter four / Q1. And in terms of its contribution to the top line, it'll definitely grow. Consultancy has been growing steadily at a rate of 10%-12%, which we will aim that it continues growing. Exports, the revenue booking has started.
And we definitely, as the roadmap that I laid out for the Mozambique locomotives as well as the Bangladesh coaches, we will definitely see revenue coming in every quarter. So, the inter se mix between the various segments may differ from quarter- to- quarter. But that's the trend which you can see. And maybe a better picture would emerge of the total overall percentage of each of the segments over an annual basis. So, in a particular quarter, it may vary depending on the deliveries.
It may depend to annual also, b ut just to get some clarification. So, let's say the share of Export revenue grows up. Does that mean the share of revenue, let's say Turnkey or Leasing, comes down because of that? Or how does it work? What grows vis-à-vis to another?
No, they are not interlinked. You see, the point is that overall, there are two broad directors or two broad guardrails of the things that the overall things that we want to achieve. And that's the overall growth in the top and bottom line, while still securing our overall EBITDA margins at 20%+ and PAT margins of 15% red line minimum, both these to 20% and 15%.
Now, as I explained, the variation in margins across the four streams is so large. What we definitely try and achieve while we don't sacrifice or pull up one for the other, but we definitely keep an inter-blend mix between the four segments so that overall there is a growth in top line, bottom line, with these two red lines having been maintained of 15% and 20% in EBITDA and PAT margins.
Okay. Okay, t hank you so much.
Thank you. Next, we have a follow-up question from Viraj Mithani from Jupiter Financial.
Thank you for the opportunity. Sir, my question is, what will be our OpEx and what will be our dividend policy? Will it be the same as last year or some change will be there?
Yes, Viraj. I have committed always in the last more than a number of quarters that you will not come up with any surprise of us suddenly putting our capital somewhere or doing something away from our basic business model or suddenly changing our color from a consultancy company to some other company. We are very clear in our strategy and our business model, and we will continue to try and improve on that and give better performance.
So, with that, our basic requirement of being a debt-free company, low CapEx company, literally minimum working capital requirement, I don't foresee any reason of us not maintaining the healthy dividend payout ratio that we have been maintaining. And as you see, this quarter also, we maintained about 94% dividend payout ratio.
Okay. Okay, t hank you, sir, t hank you.
Thank you. The next question comes from the line of Sahir Arora, an individual investor. Please go ahead.
Hi. Good morning, sir. Thanks for the opportunity. I just wanted to check with you. Like you said, in the PMC business, due to the accounting policies, you have to pass it through the revenue. What percentage of that revenue would be our consultancy income?
Not in the PMC business. In the turnkey business.
Sorry.
In the Turnkey business, the revenue passes through us. So, again, we get most of our orders on competitive basis. So, for example, let's say our consultancy fee for discussion is about 5% or 6%. Now, if we had got that as a Consultancy order, our value of order would have been INR 6 crore. If we get it as a turnkey order, its value is INR 106 crore. So, if it's a Turnkey order, INR 106 crore passes through our balance sheet. If that order was a pure Consultancy order, INR 6 crore would pass through our balance sheet. That's the only difference in accounting. Our scope of work and responsibility, everything remains identical.
The margins also remain identical like the Consultancy ones?
No. No. Obviously, because the margins in a Turnkey business, the denominator being much larger, they are in the range of 2 %, 1%-2%, and Consultancy, definitely, it is much larger, in the range of about 30 %.
Yeah. But like you said, INR 6 crore would be the Consultancy income. On that, the margins would be what you guide for the Consultancy business. Is that correct understanding?
Very correct. If it was a Consultancy order, if the order was in the form of a Consultancy order, if the value of the order was INR 6 crore, then it would be accounted in our Consultancy order book, and the margins would be higher. But if the order value would be INR 106 crore, then it would be accounted for in our Turnkey order book, and the margins and the contribution from the margins in the Turnkey would be much lesser.
Okay. Thank you, sir.
Thanks.
Thank you. Ladies and gentlemen, if you have a question, please press Star and one on the telephone keypad. In the interest of time and fairness to all participants, we are requested to restrict yourself to one question per participant. Next, we have a follow-up question from Harshit Kapadia from Elara Securities. Please go ahead.
Yeah. Thanks for the opportunity again, sir. Just wanted to check with you. Since you mentioned that after first year, the turnkey construction generally starts booking the revenue, so when is the peak revenue expected from your INR 4,000 crore order book? Will it be like FY 2028, FY 2029? Is that?
I would see the revenue start picking up in a peak way by latter part of FY 2027 because, as I mentioned at the outset, about 2/3 of this order book are young. They are about 8 - 10 months old, and I foresee them starting to generate revenue by Q4 or maybe Q1 of next FY. So maybe latter part of FY 2027, say Q3 onward, H2 of FY 2027, there should be a substantial bump from these young orders, while you're continuing to get fresh orders, which, as I said, with a lifespan of about 3-4 years, will maintain that trend of turnkey revenue. But you would see a bump coming in from latter part of FY 2027.
Understood, sir. Thanks for the clarification. And just on Consultancy, you had said that is there any large order expectation which is there in the pipeline? Like one we heard about, there's a high-speed rail corridor which is where the consultancy work is out for Delhi connecting to Jammu. So are you guys participating in any other such large Consultancy tender which is out, which could be, if we win, could be a bump up for us?
Harshit, I wouldn't like to speculate on orders which are in the pipeline, but I can only say maintaining the 1+ order a day, we are bidding on a large number of orders. More than 2/3 of these, about 70%, are on a competitive basis. Whether it is domestic or international, we are bidding for a large number of Consultancy orders across various sectors, including rail infra, etc.
We will. If you keep most recently, we got the IIM Bangal ore PMC order in our building vertical, which was about INR 14 crore. We continue to get the orders. We've got an order from in our QA vertical. We've got orders for various consultancy work in the QA. We will continue to bid, but it's not proper for me to speculate on orders that are in pipeline.
Fair enough, sir. No problem. Thanks. And thanks for answering all the questions, y ou were the best.
Thank you. Thank you, Harshit.
Thank you. Next, we have a follow-up question from Anand B from KSEMA Wealth Private Limited. Please go ahead.
Thanks for the opportunity again. I just want to know what would be the seasonality of your business? I mean, I agree that Export will be existing, what do you say? You say one Export a quarter as well. But for Consultancy, Turnkey, and Leasing, what would be the seasonality across the four quarters? Which quarter will do better? Which quarter will do not as big?
I would, Anand, not be able to, I mean, it's not fair for me to put any seasonality to any particular stream. It's more a question now of in each of these segments, as you see Export orders having got the first order after a long gap in early 2024, the.
I'm sorry to interrupt. Your voice went off, sir.
Yeah. Can you hear me now?
Yeah. You're audible now, sir.
Yeah. So I was saying, Anand, that in case you lost me, I was trying to say that you see now we are getting revenue from each of these streams. For example, in Export, the Mozambique order that we got in 2024, early 2024, this was the first quarter that it started generating revenue because the locomotives have started getting manufactured and started getting exported. And now we see that continuously, whether it's the Bangladesh order or the Mozambique order, the Export stream will generate revenue continuously, irrespective of the seasonality in every quarter.
Similarly, in the Turnkey, the young order book, they are now in the stage that by quarter one, latest of next year, you will see a substantial contribution from the young Turnkey orders because they would be about 12- 15 months old, and execution would start at the ground level. Consultancy orders, w e have a large bouquet of Consultancy orders, small and big.
They generate revenue regularly on every quarter, irrespective of the particular quarter. That's why you see a steady growth of about 10%-12%, both YoY and sequentially, in the Consultancy segment. Each of these segments in the coming quarters have a different timeline of generating revenue, Turnkey being the one which will start seeing substantial increase in the next FY.
Okay, o kay, t hank you.
Thank you. As there are no further questions, I would now like to hand over the call to the management for their closing comments.
Thank you, t hank you all for taking our time and asking us about our performance. As I said at the outset, this has been a satisfying quarter for our team, that we are moving in the right direction in the roadmap, in line with the roadmap that we had set at the beginning of the FY. And I'm sure that we will continue our focus on improved execution in Q3, Q4 so that definitely not only touch the levels of last year, but try and exceed them both in top and bottom line. While securing our margins, definitely exceed the top and bottom line by a substantial quantum. Thank you very much.
Thank you, sir. Thank you all for being a part of the conference call. If you need any further information or clarification, please email at investors@rites.com. Ladies and gentlemen, this concludes the conference for today. Thank you.