RITES Limited Q2 PAT fell 11% as margins narrowed despite higher revenue

RITES Limited reported consolidated profit after tax of Rs 97 crore in Q2FY27, down 11.0% from Rs 109 crore in Q2FY26, although operating revenue rose 1.5% to Rs 557 crore. RITES attributed the profit decline to lower exports and a change in revenue mix, while its EBITDA margin declined to 22.1% from 24.4%.

What drove RITES revenue in Q2FY27?

RITES increased consolidated operating revenue by Rs 8 crore to Rs 557 crore in Q2FY27 from Rs 549 crore a year earlier. Consolidated total revenue increased by Rs 4 crore, or 0.7%, to Rs 583 crore. On a standalone basis, operating revenue rose 1.6% to Rs 522 crore and total revenue rose 0.7% to Rs 565 crore, showing broadly similar top-line movement across the two reporting bases.

RITES said turnkey, leasing and REMC businesses maintained revenue momentum during the quarter despite lower exports. The Q2FY26 revenue comparisons were restated because reversals of provisions were reclassified from other operating income to expenses. The presentation therefore uses restated Q2FY26 operating revenue of Rs 549 crore on a consolidated basis and Rs 514 crore on a standalone basis.

Why did RITES profit fall despite higher revenue?

RITES said lower exports and a changed revenue mix reduced profits and margins even as revenue edged higher. Earnings before interest, tax, depreciation and amortisation, or EBITDA, declined 8.0% to Rs 123 crore from Rs 134 crore, while profit before tax, or PBT, declined 10.5% to Rs 131 crore from Rs 146 crore. PAT decreased by Rs 12 crore to Rs 97 crore.

The EBITDA margin contracted by 2.3 percentage points, the PBT margin by 2.8 percentage points and the PAT margin by 2.1 percentage points between Q2FY26 and Q2FY27. RITES defines EBITDA as PBT plus interest, depreciation and amortisation, minus other income. Standalone earnings moved in the same direction, with EBITDA down 6.6% to Rs 93 crore, PBT down 8.5% to Rs 121 crore and PAT down 7.7% to Rs 94 crore.

Standalone segment data shows the change in revenue composition cited by RITES. Export revenue was Rs 48 lakh in Q2FY27, compared with Rs 60 crore in Q2FY26, while the export segment recorded a Rs 2 crore loss after a Rs 6 crore profit a year earlier. Turnkey revenue, by contrast, rose 65.9% to Rs 187 crore from Rs 113 crore, but generated Rs 3 crore of segment profit at a 1.6% margin, compared with consultancy profit of Rs 94 crore at a 33.0% margin.

Leasing was the other segment with a substantial improvement, with revenue rising 14.5% to Rs 49 crore and segment profit increasing 51.6% to Rs 19 crore. Its margin rose to 39.5% from 29.8%. RITES said higher locomotive utilisation supported leasing revenue and turnkey projects gained execution momentum, but these increases did not offset the sharp fall in export contribution and the changed revenue mix. The company also reported unallocable expenses of Rs 37 crore, compared with Rs 34 crore in Q2FY26.

How did RITES perform in H1FY27?

RITES delivered higher revenue but lower profit in H1FY27, extending the Q2FY27 pattern over the first six months. Consolidated operating revenue rose 4.9% to Rs 1,089 crore from Rs 1,038 crore, while total revenue also rose 4.9% to Rs 1,144 crore. RITES attributed the revenue movement to growth in turnkey, leasing and energy business.

Consolidated EBITDA for H1FY27 declined 3.1% to Rs 243 crore, PBT declined 2.4% to Rs 262 crore and PAT declined 2.6% to Rs 195 crore. EBITDA margin was 22.3%, down from 24.1% in H1FY26; PBT margin was 22.9%, down from 24.6%; and PAT margin was 17.0%, down from 18.3%. RITES said profits decreased because of the change in revenue mix and that margins remained above its guided range.

Standalone results also combined revenue growth with lower earnings in H1FY27. Operating revenue rose 5.2% to Rs 1,020 crore and total revenue rose 5.1% to Rs 1,090 crore, while standalone PAT declined 1.6% to Rs 166 crore. Standalone EBITDA margin decreased to 17.5% from 19.0%, and standalone PAT margin decreased to 15.2% from 16.3%.

Conclusion

RITES’ Q2FY27 results show that an Rs 8 crore increase in consolidated operating revenue did not translate into higher earnings: consolidated PAT declined by Rs 12 crore and EBITDA margin reduced by 2.3 percentage points. The segment data identifies the principal shift, with exports falling to Rs 48 lakh from Rs 60 crore while turnover growth came from turnkey and leasing activities with different profit contributions.

The next disclosed operating development is an expected export contribution from Q3FY27. RITES said the first rake of coaches had been supplied to Bangladesh through October and that profits from exports were expected from Q3FY27. The company also added Rs 446 crore of orders, including extensions, during Q2FY27 and reported an order book of Rs 9,388 crore, setting the disclosed context for subsequent execution.