Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics (Q3 FY'25) #
- Revenue: INR 1,326 crores.
- EBITDA: INR 139 crores.
- EBITDA Margin: 10.5%.
- PAT: INR 76 crores.
- PAT Margin: 5.8%.
Key Financial Metrics (First 9 Months FY'25) #
- Revenue from Operations: INR 3,766 crores.
- EBITDA: INR 411 crores.
- EBITDA Margin (9 Months): ~11%.
- PAT (9 Months): INR 210 crores.
- PAT Margin (9 Months): 5.6%.
Comparison with Previous Quarters and Year-over-Year #
- Q3 FY'25 performance was “slightly lower than Q2 FY ‘25” due to non-availability of wheelsets.
- Freight Car Deliveries (Q3 FY'25): 2,714 freight cars, a 54.6% YoY growth (compared to 1,756 in Q3 FY'24).
- Cumulative Freight Car Deliveries (9 Months FY'25): 8,015 freight cars, a 70% increase YoY.
Jindal Rail (Texmaco West) Performance #
- Q3: 526 wagons, turnover INR 265 crores, PBT INR 35.72 crores.
- 9 Months: 1,417 wagons, turnover INR 692 crores, PBT INR 98.45 crores.
Areas of Growth or Decline #
- Growth: Significant YoY growth in freight car deliveries. Consistent flow of orders and execution in key segments.
- Decline (QoQ): Q3 FY'25 performance slightly lower than Q2 FY'25 due to operational challenges (wheelset availability).
- Interest Costs: Marginally higher in Q3 vs Q2 due to buffer funds for Jindal Rail acquisition leading to unutilized CC limits in Q2.
- Other Expenses: Increased from INR 27 crores to INR 35.98 crores sequentially due to “certain initiatives taken by management for the future growth and the prospect of the company”.
Strategic Initiatives & Business Updates #
Major Strategic Announcements #
- Merger: Approval from the Board for the merger of Texmaco West Rail Limited (formerly Jindal Rail Infrastructure Limited) with Texmaco Rail & Engineering Limited. Expected to take 6-8 months.
- Business Reorganization (Slump Exchange): Transfer of the Infra-Rail and Green Energy (EPC group) business into a 100% subsidiary of Texmaco Rail on a slump exchange basis. Expected completion in 12-15 months.
- Credit Rating Upgrade: Long-term bank facilities upgraded to CARE A; short-term facilities to CARE A1.
New Products, Services, or Markets Discussed #
- Double Deck Wagons: Company is involved in new generation double deck wagons (Act 1, Act 2, Act 3) for automobile transport, including SUVs and tractors.
- Vande Bharat Sleeper Interiors: Started receiving orders for Vande Bharat sleeper interiors.
- Specialized Wagons: Milk tank refrigeration for Amul completed. Expect specialized wagon demand to increase.
- Global Design Capability Center: Centralizing entire design into a global capability center.
Significant Operational Changes #
- Managing wheelset shortage by “doubling up our production in the later part of the quarter” and permission to use imported wheelsets.
Ongoing or Completed Projects #
- Odisha Steel Foundry Expansion: Work is in full swing; expected to be operational by “middle of next year”. Total capacity will be 80,000 metric tons of finished casting. Current steel foundry capacity is 48,000 metric tons, with ~90% captive consumption.
Market & Competitive Landscape #
Insights about Industry Trends #
- Railway Budget: Maintained rolling stock budget around INR 46,000 crores, viewed positively as it ensures consistency with long-term plans.
- Long-term Railway Mission: Target for railway’s share in logistics to reach ~47% by 2030 (from 26%).
- Demand for Specialized Wagons: Growing demand for wagons catering to specific sectors like coal, mining, food grain, containers, perishables, and auto.
- Private Sector Investment: Expectation of increased private sector investment in rail infrastructure and rolling stock.
- US Railroad Renewal: US railroads are overdue for renewals, presenting export opportunities for castings.
Competitive Positioning Statements #
- Strong manufacturing capabilities and ability to cater to rising demand for freight cars.
- “highest capacity in the country in our segment and perhaps the highest in the world” for steel foundry post-expansion.
- “We are efficient. We are cost effective globally. So – at quality standardwise also, we are competing with everybody.” (referring to castings export)
- EPC Business: “We want to focus on this business, and we want to profitably grow and show exactly what we had done for our freight costs of rapidly growing and becoming a prominent player.”
Market Challenges or Opportunities Mentioned #
- Opportunity: Flattish railway budget still provides a large and stable market (~INR 38,000-40,000 crores per annum wagons as per National Rail Plan).
- Opportunity: Export market for castings, especially to the US and Australia (mining sector).
- Opportunity: EPC business growth due to government focus on track laying, signalling, and electrification.
Comments about Market Share or Positioning #
- Order Book: Total order book of INR 7,600 crores, including 11,500+ wagons and over INR 2,000 crores in electrical division.
- Private wagons constitute approx. 25% of wagon orders (2,679 out of ~11,500).
Risk Factors & Challenges #
Concerns or Challenges Acknowledged by Management #
- Wheelset Availability: Non-availability of wheelsets from Indian Railways impacted Q3 FY'25 production.