In the complex world of transportation, where highways and railways intersect, lies an important aspect to consider: railway signaling. This system ensures trains navigate their paths safely, like the way traffic lights guiding vehicles on roads.

But what’s the connection between railway signaling and highways?Think of it like this: both railway signaling and traffic lights share the same goal of keeping things coordinated and safe.

Enter RailTel Corporation of India Limited, a key player in this domain. Established in 2000, RailTel has become the digital backbone of Indian Railways, transforming operations and connectivity. Its role extends beyond railways, encompassing communication infrastructure and services.

RailTel’s operations span various segments, including telecom infrastructure and data center services. Its extensive fiber optic network, stretching across the nation, facilitates not only railway operations but also serves government and enterprise clients.

Financially, RailTel has demonstrated stability and growth, navigating the telecom industry’s challenges adeptly. With ongoing projects aimed at expanding its network and services, RailTel’s future appears promising, contributing to India’s digital evolution.

The stock of the company has risen over almost 190 percent in just over the last year. So, In this article, we’ll explore RailTel Corporation in detail, examining its segments, financial performance, and future prospects. Let’s delve into the world of RailTel, where connectivity meets innovation.

Corporate Overview Of RailTel Corporation

RailTel, a Central Public Sector Enterprise, is an ICT provider and one of the largest neutral telecom infrastructure providers in the country, with a Pan-India optical fibre network. The OFC network includes various rural locations as well as key towns and cities around the country.

RailTel was established on September 26, 2000, aiming to enhance the current telecommunications infrastructure for train management, operations, and safety. Additionally, it sought to generate extra income by creating a broadband and multimedia network across the country and installing optical fiber cables alongside railway lines.

RailTel’s optic fibre network currently covers more than 61000 route km and 6108 railway stations in India. The company’s urban access across the country is over 21000 kilometres.

RailTel has a strategic relationship with the Indian Railways and works on a variety of projects, including providing mission critical connectivity services such as IP-based video surveillance systems at stations, ‘e-Office’ services, and implementing short haul and long haul connectivity to support various organisations within the Indian Railways.

RailTel also offers a variety of passenger services, including video on demand and Wi-Fi, at key train stations throughout India. 

Services Offered By RailTel Corporation

Network Architecture

RailTel’s optical fiber cable (OFC) network follows a structured hierarchy, comprising core, distribution, and edge layers. Utilizing various technologies, RailTel’s OFC-based communication system ensures high Service Level Agreement (SLA) standards for its customers.

With a robust, high-speed network and exclusive Right of Way (RoW), RailTel delivers dependable services to its clients. As a dynamic company, RailTel consistently expands both technically and financially to fulfill current and future telecommunication and information technology (IT) needs of Indian Railways, as well as those of governmental and private sectors.

Data Centre Services

RailTel has 02 nos. of Tier-III certified MietY empanelled Data Centres at Secunderabad & Gurugram and MietY empanelled RailCloud to offer IAAS (Infrastructure as a Service), PAAS (Platform as a Service) and SAAS (Software as a Service). Following ICT Services are being offered by RailTel.

Data Centre and Managed Hosting: Infrastructure as a Service (IaaS), dedicated hosting, managed services, cloud computing, disaster recovery services and hosted smart city and e-governance services.

Digital Services: Wi-Fi as a service, e-office, Hospital Management Information System, e-tendering/ e-auction and IoT based solutions.

ICT Hardware, Software and Service System Integration Projects: Undertake ICT hardware implementation, software delivery and digital transformation projects (Content on Demand, Video Surveillance System & Railway Display Network).

Financials Of RailTel Corporation

In the fiscal year 2023, Railtel saw a substantial increase in revenue, surging by 27% to reach ₹1,963.51 crore as opposed to ₹1,548.45 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a  Compound Annual Growth Rate (CAGR) of 20% in revenue.

On the other hand, there was a downturn in net profit, experiencing a 10% decrease from ₹208.94 crore in FY2022 to ₹189.07 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased 10.25% CAGR.

The reason for the decrease in profit despite higher revenue is due to competitive pricing pressure in the projects business leading to lower margins in FY23 compared to higher margins earlier when projects came on nomination basis.

In FY23, Railtel maintained favourable financial metrics with a Return on Equity (ROE) of 11.91% and Return on Capital Employed (ROCE) of 14.90%.

Future Plans Of RailTel Corporation

Future Growth Plans

RailTel has ambitious plans for future growth across various business segments. The company is actively pursuing opportunities in areas like the KAVACH train collision avoidance system, 5G network rollout, edge data centers, and broadband connectivity projects in partnership with state governments. 

With a robust order book and a diversified portfolio, RailTel is well-positioned to maintain its growth momentum in the coming years.

Healthy Order Book

RailTel’s order book as of March 31, 2024, stood at a robust INR 4,700 crores. The company expects to execute projects worth around INR 2,000 crores from this order book during the current financial year. 

Furthermore, RailTel is targeting fresh order inflows of around INR 4,000 crores in FY25, driven by upcoming tenders from the Indian Railways, state governments, and other sectors. The potential KAVACH project orders, estimated to be in the range of INR 5,000 crores to INR 7,000 crores, will further bolster the order book.

Foraying into New Verticals

RailTel is actively exploring new business verticals to drive growth and diversify its revenue streams. One such initiative is the rollout of edge data centers in partnership with a private player. 

The company plans to establish around 100 small edge data centers across the country, with a total capacity of around 20 megawatts. This foray into the edge data center market is expected to cater to the growing demand from government agencies, video streaming platforms, and other businesses requiring low-latency connectivity.

Strategic Partnerships and Collaborations

To strengthen its position in emerging technologies and expand its global footprint, RailTel has forged strategic partnerships and collaborations. The company has signed an MoU with Quadrant Future Tech Ltd for aggressively participating in the KAVACH tenders, leveraging the latter’s expertise in this indigenous train collision avoidance system.

Additionally, RailTel has entered into a tripartite MoU with InoviTel and Tsiko Africa Energy and Infrastructure to explore opportunities in telecom, railways, and other IT/ICT businesses in South Africa and adjoining regions.

Conclusion

RailTel Corporation has established itself as a key player in India’s digital infrastructure, leveraging its extensive network to drive innovation in the railway and telecom sectors. With a robust order book, strategic partnerships, and a diversified portfolio, the company appears well-positioned for growth.

However, the true test lies in execution and adapting to emerging technologies. What are your thoughts on RailTel’s future prospects and its ability to capitalize on the opportunities ahead?

Written by Nalin Suriya S

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