Texmaco Rail & Engineering Limited (TEXRAIL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Texmarko Real Engineering Limited Q1 F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nabeen Sahadev from ICICI Securities. Thank you, and over to you, Mr. Sahadev.

Thank you, Ganjub. So, on behalf of ICICI Securities, I welcome you all to the Q1 FY27 earnings call of Texmacro Rail and Engineering Limited. From the management, we have with us Mr. Indrajit Mukherjee, Executive Director and Vice Chairman, Mr. Sudipta Mukherjee. Managing Director, and also Mr. Kishore Kumar Rajkariya, CFO. So without any further ado, I hand over the conference to the management for their opening comments. Over to you, sir.

Good morning to all our dear investors. My name is Indrajit Mukherjee. I am Executive Director and Vice Chairman of Texaco Rail and Engineering. With me, I have our Managing Director. Mr. Sudipto Mukhaji and our CFO, Mr. Kishore Kumar Rajgariya, they will all participate in this today's meeting, which is considered to be very, very of importance and important for us. It is, as usual always, a great pleasure to connect with you. And on behalf of the entire management team, FY27 earning calls of Tech's MacroRail and Engineering Limited. Today we will be discussing the company's standalone results, which is the financial and as well as the operational performance for the first quarter of FY27, which means April to June. Along with the progressions, we have made on our strategic priorities and many key business Some of it we discussed earlier and I think we would be updating you. The first quarter has been a period of focused execution of the company. We continue to build on the progress made over the last few quarters with our teams remaining highly focused. Improving operational efficiencies and strengthening our business across multiple segments. We also continue to make progress on several strategic initiatives that will support the company's long-term growth. I have mentioned a few of our immediate... We have taken and we have started yielding results. I have not been comprehensive, but I want to talk only of a few which are... ...which are of importance to us, and... So our short-term initiative has been, as we mentioned earlier, to drive to improve our EBITDA. See them in the numbers. So let me first tell you about the first quarter of F5 to 2027. The company reported a standalone revenue from operations of, standalone revenue from the operations of Rs.753 crores, which was This is the description of the freight car divisions and the infra, which is red and green, which used to be called as Kalindi before. 175 crores. It was the electrical infrastructure business. to Rs 81 crores, translating to a margin of 10.8%, which itself is a strong growth from the earlier years. In line with corresponding quarter of the previous year, despite Companies focus on cost optimization and margin improvement. Encouraging improvement in the profitability of our infrastructure business. And the green. A strong performance, which is EBIT margin improving to 10.8%, representing an expansion of 150 basis points on year-on-year basis. Our continued focus on strengthening the balance sheet through improved cash management, disciplined date payment, and optimization of borrowing Cost resulted in finance costs declining by 18.2% year-on-year basis. The reduction in finance costs supported profit before tax, which increased by 4.8% of your money to Rs.40 workers, with the margin improving... Sorry for interrupting.

Speaker, your voice is breaking. Please go ahead.

From where shall I repeat? Would you be able to tell me?

Just a sentence backward. You can start from there.

The reduction in finance cost supported by profit before tax increased by 4.8% YOY to 44 crores, with the margin improving by 1.23% to 5.9%. Profit after tax increased by 85.9% on a YOY basis to Rs. 52 crores. Translating into a PAT margin of 6.9%, an improvement of 381 basis points worldwide. On the operational front, company delivered 1,054 predicas during the quarter, while the founder division recorded a production of 5,148 tons. These operational matrices reflect our continued focus on execution. Across our core manufacturing businesses. Beyond the quarterly financial and operational performance, we also strengthen our order book during the quarter. As of June 30, 2026, company's order book is standing at 9,923 crores, providing multi-year of execution visibility across freight cars. Infrastructure, rail infrastructure, electrical, and other businesses. During the quarter, we secured a diversified set of Indian and international orders across the freight railing stock, railway signaling, electrification, and transmission infrastructure, further strengthening our execution pipeline. As I said, that EBITDA improvement had been one of our... One of our tasks on the immediate basis, and they were achieved through better product mix, going to higher margin, expanding to geographical areas, and also AI-enabled efficiency improvement actions. We continue to see a structural shift in the freight car divisions' order book, the share of private... Sector and export orders increased from 21% in FY25 to 79% in FY26 and further to 96.4% in Q1 FY27. This reflects the increasing participation of private customers in the freight rolling market while further diversifying our order book. And revenue visibility and, of course, margin improvement. We have moved ahead. As we move ahead, our focus remains on strengthening the freight rolling stock businesses, which is our core business, while continuing to broaden our presence across complementary businesses that reduce the impact of industry's cyclicity. Additional avenues for growth. The progress we have made over the last few quarters reinforce our confidence in the direction we have taken and provides a strong foundation for the company's long-term growth. Several of these strategic initiatives have continued to progress during the quarter. I request Suditto to take you through them in great details, sharing how they are shaping the next phase of Texarkov's journey. I would like to thank you for your patient hearing, and I would now request Mr. Suditto Mukherjee, our Managing Director, to step in and say a few words.

Thank you. Thank you, Indujit. Good morning, everybody. So, of course, very nicely narrated by Indujit on the standalone text macro that what are the improvements. In a nutshell, I would like to... Working the talk in terms of our focus, which we always tell that we are focusing strongly on the bottom line. Keep our words. Momentum will continue. Which is a significant, I mean, movement in terms of... We have a larger share of the leasing market because you all know that the government very proactively and the Ministry of Railway is reforming the policies and coming up with enablers for exciting the private investment in the country. Is with the maturity level increasing. So from the government purchase, the private stakeholders are also becomes an important partner into the whole development. And when it comes to a private OEM to have those rolling stocks, which are capital intensive, so we always see a share of capital, capex investment as well as leasing. So, although we were running the company very profitably, but the scale was not up to that level, but with all the policy initiatives by the Ministry of Railway and Honourable Railway Minister, we feel that this space... with the coming of Trinity. into an entity who also has a manufacturing base with One of the largest manufacturer as well as leasing company of US and also having Fighting journey way forward, and we look forward to increase our This is a compliment in the whole marketing initiative of TexMarco, while we want to remain. In terms of our JV related to, along with WAP. We are also working on a new design vacants, of course, with a new design. In regard to our interior company, which where we invest in, Thank you.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on a touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Pala Subramanian from Aryan Capital. Please go ahead.

Thank you. Sir, our new growth engines are coverage and signaling and renewable energy and defense, and third one is a leasing platform. So, I should share the detailed roadmap about our capabilities and our strategy and capital allocation, and we could give the detailed roadmap about preparation phase and deployment and harvesting. Yes, I am signaling that need high technical capabilities, and how we are positioned to capture in this opportunity. And renewable and defense is completely a new area, like compared to our core area. And we are trying to, like, mitigate this cyclical industry of wagons, so how we are going to take it forward. On that leasing platform side, I think the whole industry is slightly moving toward leasing. You have mentioned about we are the highest market share in the leasing side, how many weapons we have leased out, and we could talk about the future of a leasing platform also. Yes, sir, please.

Yeah, so I think it's a mix of statement and questions. If I go wrong, please point out to me if I miss anything. So, yes, the areas you have mentioned in terms of coverage, defense, renewables, there were two parts in your statement that one is that the roadmap, and I think we have already given a roadmap in our plan vision. But, of course, the strategy cannot be discussed over a call like this, that how we are going to achieve. I can only say two, three pointers that, I mean, on a concept level, Techsmacko as a company, if you have seen that our, we want to, why we want to strengthen our core business. Which is mechanical engineering heavy. We had remained mechanical and metallurgy engineering heavy. But at the same time, if you see that there were certain probable revenues would have come from the other businesses which we were pursuing since last nearly a decade or little less than that, which also focuses on electrical and electronics. Part of it, while we work for electrification, signaling, EPC contracts. So, Texmacco has also successfully been one of the companies in India who are the major contractor in consortium with Hitachi for the dedicated freight corridor, including the track lane to the signaling integration. Most of the metros in India also, I will say most, not all, TexMaco has worked. In electrification journey and the development of the country, our bright, I mean, which we called as a bright power, has always remained a bright spot, which is also TexMaco. And these were not at all a traditional business of TexMaco. But you have to believe on a company who is running successfully more than eight decades. And it's a business phase, and we know how to build the capability. To emphasize the points in the areas where we have gone into, we have always mentioned that we have very carefully chosen our path, and we took time. And we always love to say that we do not want to do a business on a niche arc or to be flashy, to impress anybody on a superficial level. But we have chosen our path very carefully after we have invested in the capability, which starts from having right kind of people, and with a proper evaluation and venturing into all of those businesses. So this remained on a very strong focus of us, and Techsmacko is not taking... And we have been going. Where we can make a difference, be it coverage, be it It's going to be a non-commodity, and you will see a... On the leasing, I think you have mentioned that, yes, we want to, even if not the leader, I mean, we have a very clear position that there are few companies who are operating, including one of the largest multinationals. So this is also a multinational company. We want to have at least a 50 percent share in terms of the business from a jump from 15 percent to 50 percent. Today, we have around 35 rates operating in... On a near term, we are absolutely ready to invest around, to start with, around 100 RIGS burden.

Thank you, sir.

Yeah, please go ahead.

The leasing company is a joint venture company, as you know, where presently after the entry of the world-major trinity of US, our stakes will be 34 percent, from 50 to 30. That's a joint venture company, not within Dexmacro. As far as your... I think the capital allocations primarily will be in core business, or there will be also in the defense segment, which will gradually go up, because we take a very, all our business growths are taking a lot of risks together. I mean, we take care of the risks, so percentage-wise It will not be a huge one, but there will be investments. Thank you.

My last question, Mr. Subramaniam, your voice is breaking.

Can you please come in the range and talk?

Sir, the order is to pick up for 5,000 euros.

Sir, we are not able to hear you, sir.

Sir, the order is to pick up for 5,000 euros.

Sorry, Mr. Subramaniam, I...

Mr. Subramaniam, we request you to come back in the queue. Thank you. Next question comes from the line of Parves Kazi with Nuama Group. Please go ahead.

Yeah, hi. Good afternoon. Thanks for taking my question. So two questions from my side. First, continuing with your comments on the wagon leasing business for additional 100 rigs. There was a news article which says that overall these three partners, JV, can potentially invest about 1,800 crore over the next three to five years to lease about 100 or 30. Is this number broadly correct?

Good afternoon, ES.

And the second question is about another news article where the management was talking about the South African order, and apparently we are looking to establish a locomotive plant and a wagon manufacturing plant in South Africa, and which might entail an investment of about 200 to 300 odd growth. So, just wanted to get your views on this. Are these numbers correct, and what is our strategy regarding this order?

So I'm not in a position to mention about the numbers because these things changes. But yes, in terms of the facilities, yes, we are looking forward to. Because you need to meet a lot of localization thing and business is a continuous evaluation thing that which fetches you what. So yes, we are looking for. We are open to put up something which helps in the cause of our improving the export business in terms of wagon as well as locomotive. And you also remember that we are working now also not only on supply, but also in terms of providing maintenance on a long-term basis.

More important than the investment is our footprint. in the South African soil. So this is ...companies to... Start doing business. I mean, we will remain there because making our footprint there. So that's more important, I think, than the amount of investment because investment will start going up as we start doing business. But the business is very, very, very good. It's good for the country also, for India.

Sure, sir. Last question. I mean, we have seen very strong order intake in Q1. Just wanted to get your thoughts on any potential wagon tender from the Indian Railway. Thank you.

We are all expecting as all of you are expecting because everybody agrees that there is a need to railways to induct wagons. And with the forecast or the numbers, and I think in recent time also, a lot of reforms have been taken up that how we shift the transport more from road to rail. And, of course, the same model share of 40 to 45 percent, which was indicated through national rail plan, has been consistently reached. And in the present geopolitical situation, we all know that the more we use railway transport, it will be softer on our inflation control and to keep the momentum of the GDP growth, because we spend less money in terms of importing oil. So there is a lot of sense which it makes, but we believe strongly that railway is very sincerely working in and around it. And it's also a very, very wonderful decision to welcome private investment around and to call for all kinds of innovation and introduction of new designs, because we are standing in a very transitional situation, because while the DFCC is going to be fully operational, even to the extent it is being operational, it has shown a tremendous kind of traffic. Railway tracks and further investment in and around the railway tracks to decrease. So, we believe that it will be a progressive demand from railways, and we expect soon that Indian Railway will also come up with something. Private OEMs to England.

Sure, sir. Thank you all the way.

Thank you.

Thank you. Next question comes from the line of Deepak Poddar with Sapphire Capital. Please go ahead.

Am I audible, sir? Thank you very much, sir, for this opportunity. Sir, I just wanted to understand on your co-business, FCD, so now 96% of our order book is private and export, right? So in terms of execution, any kind of challenges we are facing? I mean, can you throw some more light on that?

We are not facing any challenges in terms of execution, but yes, the first quarter, there were a lot of challenges in terms of the supply chain. You know that it is not faced by the industry per se. I think it was a general phenomenon, because the oil and gas price prices were so high, and we had to always control the consumption, considering that there could be a crisis. So all of these, and not only about us, but also our partners who supply us various critical components. So it remained a little bit of stress in and around the supply chain. But for us, the kind of mix, fortunately, we are enjoying. In spite of these rises and the various initiatives on focus on cost reduction and our strong operational control, It has helped us to improve the profitability, and we believe that it is not one-off, and this will continue. And rather, we feel that our supply chain issues, whatever we suddenly faced, because of those, we have done some alternative arrangements, and our output is going to improve from the coming quarters, and it has started improving.

No, and anything on the wheelset as well? I mean, we are facing any problem on wheelset?

As of now, no, but you cannot say because the industry production remained very timid perhaps this quarter, and we are dependent on the supply of rail wheel factory, and that's what is the mandate of the government. We have enough stock for our... We have enough avenues for our export orders, private orders, so we didn't face anything around the wheel sets. We are not also...

And as you mentioned now, that execution you expect to improve in coming quarters. So this year, what sort of execution you are targeting?

I think we have made an indication because, see, I have been telling that let's not talk about, say, if you talk about capacity, we can say that our capacity is elastic, we can make 15,000, 16,000 wagons. But when we say so, those are the commodity wagons. Now your company is making more specialized wagons rather than the commodity wagons. So their volume doesn't matter. Here the overall top line and the bottom line of the profitability matters. And it's also not about wagons. Qualitatively, the whole company is changing in terms of our foundry. We are changing our product makes. I mean, every vertical.

I mean, anything on the growth part? I mean, on the revenue growth, if you can comment on it.

That indication was already given, I think, in our business plan. We believe that we will, I mean, we are on the work that we do better than our previous years.

Better than in terms of growth? I mean, the... Yeah, yeah.

You know, growth and bottom line improvement. That's what we worship. I'm talking to, I'm taking these statuses is the worst status.

And any order inflow expectation we have for this year, FI27?

Absolutely. I mean, we have a very strong expectation of order flow continuously.

And this will be driven by private and exports only, or I mean, railways also you expect to pick up?

As of now, we can only talk about private and export, and why we have a strong belief that railway will come up with some kinder. Looks like we are more or less insulated on the other side.

Thank you. Next question comes from the line of Rajesh Pandhavi with Nakoda Engineering. Please go ahead.

Good noon, sir. Aapne jasee bataya ki this is a transitional phase. Yeah, because I could see that freight cars jo hai apna uska production kaaphi come ora. And you also said because of the gas and this petroleum product cost. So, sir, I just wanted to know one thing, that in 2030, there is an expectation that we can move on to the end of the year.

Mr. Bandaari, can you speak in English, please? Hello, sir. Mr. Bandaari, can you speak in English?

Yeah, yeah. I just wanted to know, as you mentioned about the transitional phase, and also less dependence on the freight cars from the railways, That's something very good. But what I am seeing is the reduction in the freight car production. And was that only because of the gas and petroleum supply problem? Or it was for some other reason? Lack of orders. And along with this, I would like to know, sir, what is our roadmap for 2030?

So if you see the numbers, That in terms of order book, our order book remains very healthy, so there is no lack of order. If I have spoken about oil and gas, I said that interrupted the supply chain, and supply chain includes boogies, other components, whatever we buy, and what we manufacture. So that comes and fits in the rolling stock. If it doesn't come, then you have a stress situation. But in spite of that, our profit and the margins have improved from the corresponding quarter, so one should not be worried that how much number of rolling stock we have made. But yes, with that, the question is, can you... Could you make it better? The answer is yes. I said that we are making it better. More numbers, more profitability, that's fine. In terms of 2030, we have already given a Xmacro 2.0 and Vision 2030, where the ambition of the company and the company is not only ambition, we are working on it as a roadmap, where we believe that the core business or the loading stock business, even if it So, qualitatively will improve in terms of the bottom line, but on the top line, suppose if we remain around 5,000 to 6,000 crore, we want to create a mirror image of that, making our top line into 2x, two times by 2030 by adding a few more businesses into the portfolio. One more point after you finish. Thank you. Thank you. With a steady bottom line towards meeting.

I would add, in addition to Mr. Saripta, sir, one more point, because your question was, wagon business in 2030. So, I have to give you only the map. It's very difficult to say 2030 in any country, anywhere. So, I could only give you a macroeconomic view. The macroeconomic is that there is a rail plan, national rail plan. The National Rail Plan is saying that they want to increase the transport, rail transport share. For 27%, I believe, to 45% in 2013. So now if you derive from that plan of the government, then obviously you would need more. So, there has to be improvement in wagon purchases. So, I wanted to give you a macro view.

Thank you, sir. And one more question regarding Metro, Vande Bharat, and defense, our activities.

For national security. So, obviously, It's a very huge area. Making bullets. of strategy, which is, as you can understand in a defense business, we shouldn't be talking about this now. But when the right time comes, maybe we will. Your other question was on the Bandai Bharat and Metro. We are definitely very interested because as you see that we are now carrying goods. So normal transition should be from freight car to passenger car. So, obviously, we should do that, but we don't want to jump into a metro or railway business without knowing whether we'll make how much of profit, whether we'll make profit, because the demands are not drying up, demands are increasing, because more urban transportations are coming up, tier two, tier three cities are coming up.

Yeah, yeah, tier two, tier three, correct.

So, obviously, the demands are there, but we have to be very careful. We don't want to burn our fingers by getting into a business and then not making money. That's why we are waiting. Mukherjee, Sudip Mukherjee is very actively working to see how we can set up. As you know, that we...

Yeah, yeah, yeah, I read that. Thank you, sir. Thank you very much.

Thank you. The next question comes from the line of Sommil Shah with Paras Investments. Please go ahead.

Yes, sir. Good afternoon. This quarter, we won orders worth 5,200 crores. So, normally, what is the execution timeline? Because I think, including this order, our total order book has reached almost 10,000 crores. So, how much of this is going to be executed in this year, and how much is a long-term maintenance contract? Can we have some news of the management?

Yeah, so this order is executable in the next financial year, and primarily, of course, some preparation work will start this financial year. Prototypes and the maintenance is for 15 years and that amounts to around, I mean, 30-35% of the whole value. But this value also has a probability to significantly improve because as per the understanding, there is something more to come. So, which once it comes, then we'll be able to tell you the exact share that how much it will add on into this financial year. It's under process and how much it will be in the next financial year. But whatever we have received so far, around 60% or 50% of that should be by next financial year. Balance will be spread over.

Okay, okay. So, this new 5200 crores, we are not expecting to be executed in this financial year.

If you are talking about the South Africa order, then that is not 5200 crores, that's around 4100 crores. I was talking about that.

Okay, okay.

Other than that, there are some export orders under execution, and... Some of you expect.

Okay. And, sir, I saw your 2030 vision for EBITDA and our revenue guidance. But if you could throw some light for the, I mean, one to two years perspective, what are we looking at in terms of revenues and EBITDA, if you could guide us for FI 27 or FI 28?

So, some of the new initiatives should start paying off in addition to whatever you have seen TexMaco to grow in the last one or two years in terms of the top line. We said that we have a strong focus on the bottom line and it's a journey towards the mid-team. And in terms of our core business, our target is to further improve the EBITDA at least to... In the range of 1.2 to 3% in next couple of years, 1 to 2 years. Which we are coming up. I suppose every year we can have an option, I mean, around the front. In terms of top line, and of course, we are not, as I said, that not.

So, at least 15 to 20% revenue growth we can expect for one or two years. Okay. Thank you. That's it from my side.

Thank you. A reminder to all the participants that you met a star and want to ask a question. Next question comes from the line of Sandeep Mukherjee with SKP Securities Ltd. Please go ahead.

Sir, thanks for taking my question. Sir, my question is like, what is the pending number of wagons in Q1 FY27?

We have the orders in hand available with you. Currently we have orders of about more than 6,000 number of wagons with us.

And what is the reason for rise in the increase in the other expenses, sir? Is it due to the production of more export orders and private orders? Yeah, yeah.

What happens in case of export of wagons, we have to have the freight charges to be paid. So basically, income is included under the total revenue, but the freight charges is under the other expenses. So that is the main reason of increase in other.

Thank you very much.

Thank you. Next question comes from the line of Naveen Saadev with ISSA Securities. Please go ahead.

Yeah, thank you. Thank you for the opportunity. My question was around the order that we received from South Africa, which is lumpy and 4,100 crore, as you clarified. It also includes, I think, some 30 locomotives. It was discussed in the previous conco, if I remember that correctly. Given our expertise is more towards supplying wagons, If you could throw, like, you know, just a little bit more understanding will help as to what we are doing, first of all, in terms of locomotives. Is there a tie-up that we are going to do or develop this thing in-house? That's my first part of the question. Second is, you also mentioned, I think, in the previous call that this order will start getting delivery in the FY28 year, so to say. So, would it be fair to, like, you know, assume a significant part of the, like, you know, revenue of this order book entirely in 28, or you think it can probably be spread? Because given it is...

Thank you. So, just to clarify to you that the order value you are privy to only include the wagon pricing and the long-term maintenance of it. It has a mandate of the local, of course, to TexMarco, and it makes TexMarco Which is in process, and the value in relation to the locomotive will be finalized once. The play I have mentioned. Divided.

And this outstanding order of 6,000 wagons, that includes the South African orders as well. Is that understanding correct?

Yes. Yes.

And that, I believe, as mentioned in the previous call, was around 2,000 or 2,200 crore wagons in South Africa. Is that correct?

Yes. Little more than that. Other than that, we have something from Cameroon, which we are executing. I know. And there are a few which further we are walking.

Well, it's really great. I really appreciate the effort of completely, like, you know, diversifying the order book. If railways orders come, that will be certainly welcoming and very good. But meanwhile, really appreciate the fact that we have diversified. My last question was, what is the margin outlook, given that there has been a shift in the complete order book from Indian railways to private and exports? As well, so from a margin outlook perspective, a normalized basis, how should one look at margins? Thank you.

I think we, during the course of discussions, we have pointed out, and I'm quite sure that you know that is very difficult to predict. But the management is working hard to work the talk. I started with that comment because we have been consistently telling that we will... We are focusing more and more on the margin. You can see from our results what we have performed, and we want to sustain and improve over and above it. The journey which we were making towards Thank you.

On behalf of ICC Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.