RITES Q2 net profit falls 11% to Rs 97 crore as expenses rise

New Delhi: State-owned transport infrastructure consultancy and engineering firm RITES Limited reported an 11.09 percent decline in consolidated net profit to Rs 97 crore for the July–September quarter of FY2026-27, as higher expenses and sluggish revenue growth weighed on profitability.

The company had posted a consolidated net profit of Rs 109.10 crore in the corresponding quarter of the previous financial year, according to its regulatory filing on Wednesday.

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Revenue from operations increased marginally by 0.69 percent to Rs 582.81 crore from Rs 578.83 crore a year earlier, indicating largely stagnant business growth during the quarter.

Meanwhile, total expenses rose 3.68 percent to Rs 452.80 crore from Rs 436.74 crore in the year-ago period, outpacing revenue growth and putting pressure on earnings.

Delayed revenue milestones affect performance

RITES Chairman and Managing Director Rahul Mithal acknowledged the subdued quarterly performance, attributing it partly to delays in achieving planned revenue milestones.

“The performance in the quarter was muted, with certain planned revenue milestones sliding marginally into Q3,” Mithal said.

“We remain focused on making up for this in the remaining quarters and achieving the targets set for the year,” he added.

The management’s comments suggest that some revenue expected during the September quarter could be recognised in the October–December period, subject to the completion of the relevant project milestones.

Profitability under pressure

The latest results highlight the challenge facing RITES in translating its infrastructure consultancy and engineering business into stronger earnings growth.

While revenue remained virtually unchanged, the increase in expenditure contributed to a contraction in profitability.

Based on the reported figures, the company’s consolidated net profit margin declined to approximately 16.64 percent from 18.85 percent in the year-ago quarter.

The performance also raises questions about the pace of project execution and revenue recognition, particularly as management seeks to recover the delayed milestones during the remaining quarters of the financial year.

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The key test for RITES will be whether the revenue deferred to the third quarter materialises as anticipated and whether the company can contain costs while meeting its full-year targets.

Although the management remains confident of achieving its annual objectives, the September-quarter numbers underline the need for stronger execution and improved cost discipline to restore earnings momentum.

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