Big Win in Guyana: Indian PSU Bags USD 9.7 Million Highway Project, Set for Completion in 60 Months

New international contract strengthens global footprint with significant revenue potential and long-term execution timeline.

RITES Limited has received a notification of intention to award a contract from the Ministry of Public Works, Government of the Co-operative Republic of Guyana. The contract involves providing engineering services for the design, build, and finance of upgrading the Palmyra to Moleson Creek Highway (Lot 1-3). The project will span 60 months, including 36 months for pre-construction and construction and 24 months for post-construction defect liability. The contract is valued at USD 9.71 million, excluding taxes.

Challenging Q2 FY25 Performance
The company faced execution challenges in Q2 FY25 due to project delays in various geographies. Despite these hurdles, RITES achieved sequential revenue growth of 11-12 per cent from Q1 to Q2. Management remains focused on consolidating operations and expects FY performance to align closely with the previous fiscal year. Strong order inflows totaling Rs 700 crore during the quarter highlight a solid pipeline for future growth.

Margins Under Pressure
EBITDA margins dipped to below 20 per cent in Q2 FY25, with PAT margins around 15 per cent. This decline is attributed to the increasing share of competitively bid projects in the order book. Management aims to improve profitability in H2 FY25, targeting EBITDA margins of 20-21 per cent and PAT margins of 15-16 per cent for the full fiscal year.

Export Orders Boost Prospects
RITES has secured export contracts worth Rs 1,300 crore from South Africa and Bangladesh. Revenue recognition for these projects is expected to begin in FY26. The company is focused on securing at least one export order per quarter, which is expected to drive long-term growth.

Stock Performance
At 3:20 PM on Wednesday, RITES Limited's stock was trading at Rs 295.30, up 1.25 per cent for the day. Over the past year, the stock has delivered a return of 17.20 per cent, with a modest gain of 3.46 per cent in the last month.

Future Outlook and Strategic Initiatives
The management is optimistic about improved execution and revenue growth in H2 FY25. Strategic partnerships with entities like NHAI, DMRC, and Etihad Rail are expected to boost order inflows. Additionally, the use of AI for rail inspections and efforts to diversify the QA business client base are poised to strengthen operations. With a strong order book providing 2.5 years of visibility, the company anticipates double-digit growth in FY26.

Disclaimer: The article is for informational purposes only and not investment advice.