Railtel Corporation Of India (RAILTEL) Q4 06/07 earnings summary

Executive summary

• FY07 revenue receipts reached Rs. 115 crore, up 31% YoY; reported net profit was Rs. 40.85 crore versus a Rs. 10.01 crore loss in FY06.

• A revised Ministry of Railways agreement removed annual right-of-way grant fees retrospectively and changed revenue sharing; network expansion and sales growth supported higher operating profit.

Financial highlights

• P&L income was Rs. 116.59 crore versus Rs. 62.70 crore; after construction-period interest income transfers, income was Rs. 114.32 crore versus Rs. 60.44 crore.

• Operating profit before interest, depreciation and tax was Rs. 62.57 crore versus Rs. 33.66 crore; PBT was Rs. 41.08 crore versus a Rs. 10.01 crore loss.

• Net profit was Rs. 40.85 crore and basic/diluted EPS Rs. 1.58, versus a Rs. 10.27 crore loss and negative EPS of Rs. 0.44 in FY06; accumulated loss carried forward was Rs. 6.03 crore.

• Prior-year depreciation adjustments, reversal of right-of-way amortization and revised revenue sharing affected reported results; the P&L included Rs. 42.60 crore in net prior-period adjustments.

Outlook and guidance

• The NLD licence enabled plans to pursue corporate leased lines and VPNs; the current-year plan included NGN-based switched-voice NLD in 18 cities, with 27 additional cities targeted by FY09.

• MPLS-IP deployment was intended to expand corporate VPN and leased-line sales; the stated network-efficiency target was 99.5%.

• An MoU with the Ministry of Railways was being signed with physical and financial targets for FY08.