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Ramky Infrastructure Ltd

| Quarterly Financial Results Q3 FY 2025-26

NEUTRAL SENTIMENT

Report Source

⬤7th Feb 26

Summary : Ramky Infrastructure Limited reported Q3 and 9M FY26 unaudited financial results, with auditors issuing an unmodified limited review conclusion despite emphasizing significant uncertainties regarding subsidiary project terminations and ongoing arbitration proceedings for dues recovery.

Quarterly Report Analysis & Insights

Financial Disclosures

  1. Consolidated Operating expense: ₹3,440.27 million (Q3 FY26), ₹9,423.73 million (9M FY26).
  2. Consolidated Employee benefits expense: ₹306.58 million (Q3 FY26), ₹805.82 million (9M FY26).
  3. Consolidated Finance costs: ₹175.79 million (Q3 FY26), ₹573.83 million (9M FY26).
  4. Standalone Cost of materials consumed: ₹991.01 million (Q3 FY26), ₹2,756.19 million (9M FY26).
  5. Standalone Contract expense: ₹1,917.96 million (Q3 FY26), ₹5,286.42 million (9M FY26).
  6. Consolidated Revenue from operations: ₹4,889.20 million (Q3 FY26), ₹13,398.03 million (9M FY26).
  7. Consolidated Other income: ₹617.84 million (Q3 FY26), ₹1,800.74 million (9M FY26).
  8. Standalone Revenue from operations: ₹4,526.63 million (Q3 FY26), ₹12,515.34 million (9M FY26).
  9. Standalone Other income: ₹422.68 million (Q3 FY26), ₹1,293.61 million (9M FY26).
  10. Arbitration proceedings for Srinagar Banihal Expressway Limited against NHAI for deductions, with management confident of full recovery.
  11. Disputed claims and ongoing legal evaluation for Sehore Kosmi Tollways Limited against MPRDC.
  12. Written back certain liabilities and excess provisions amounting to ₹78.67 million.
  13. Provision of ₹48.75 million made against investment in a wholly owned subsidiary (Standalone).
  14. Standalone Other equity as of March 31, 2025: ₹14,540.92 million.
  15. Equity infusions in subsidiaries (Maha Integrated Life Sciences City Limited, RAMDIL EPC Works Limited) and an associate (GP-IR Project Private Limited).
  16. Company's share of profit/loss in joint operations and associates are considered, though not reviewed by the primary auditor.
  17. Both standalone and consolidated unaudited financial results are presented and reviewed.
  18. Consolidated results include nine Joint Operations, subsidiaries, and associates.
  19. Standalone results reflect the Company's own financial performance.

Corporate Overview

  1. Registered office in Hyderabad, India. Operations span various infrastructure projects across India (e.g., Srinagar Banihal Expressway, Hospet Chitradurga Tollways, Sehore Kosmi Tollways).
  2. Ongoing arbitration proceedings with NHAI for deductions related to Srinagar Banihal Expressway Limited.
  3. Going concern issues for Hospet Chitradurga Tollways Limited due to project termination.
  4. Disputed claims and dismissed arbitration proceedings with MPRDC for Sehore Kosmi Tollways Limited, requiring evaluation of further legal options.
  5. Recoverability of significant dues from government entities.
  6. Significant dependency on government contracts and timely resolution of disputes with government authorities.
  7. Reliance on other auditors' reports and management certified information for certain subsidiaries and joint operations.
  8. Infrastructure development, including bus terminals, pharmacity, ring roads, towers, agro processing parks, expressways, industrial parks, tollways, tech management, CETP, STPS, eco solutions, carbon engineering, biomining, water supply, EPC works, life sciences, pharma innovation, and energy projects.
  9. Primary operations consist of construction and project activities.
  10. Formal and factual, primarily focused on reporting financial results and compliance with SEBI regulations.
  11. Government entities like National Highways Authority of India (NHAI) and MP Road Development Corporation Limited (MPRDC).
  12. Construction business
  13. Developer business
  14. Infused equity share capital in subsidiary Maha Integrated Life Sciences City Limited (₹1.00 million).
  15. Infused equity share capital in subsidiary RAMDIL EPC Works Limited (₹0.51 million).
  16. Infused equity share capital in associate GP-IR Project Private Limited (₹0.03 million).

Risk Factors

  1. Unfavorable arbitration rulings impact financials.
  2. Non-recovery of significant project dues.
  3. Subsidiary going concern issues persist.
  4. Project termination risks affect future revenue.

Key Drivers

  1. Favorable arbitration outcomes for subsidiaries.
  2. Recovering disputed project dues from authorities.
  3. Strong growth in core construction business.
  4. Successful execution of new infrastructure projects.

Auditor’s Report

  1. Limited Review Conclusion (unmodified) on both Standalone and Consolidated Unaudited Financial Results.
  2. Auditor does not express an audit opinion, as per SRE 2410.
  3. Srinagar Banihal Expressway Limited: Deductions by NHAI (₹2,522.94 million) for substandard work, with ₹1,872.75 million recommended for release. Arbitration initiated, management confident of full recovery, no adjustments made pending outcome.
  4. Hospet Chitradurga Tollways Limited: Project terminated by mutual consent in FY15, affecting its going concern nature. Financial impact provided in earlier financial statements.
  5. Sehore Kosmi Tollways Limited: Project termination notice issued to MPRDC. Accounting on liquidation basis. Claimed ₹968.60 million, accounted for ₹582.00 million receivable. Received ₹346.35 million (disputed). Arbitration dismissed by High Court, evaluating further legal options.
  6. Non-review of interim financial results for 23 subsidiaries by the primary auditor, relying on other auditors' reports and management certification.

Board Commentary

  1. Going concern issues for Hospet Chitradurga Tollways Limited due to project termination.
  2. Uncertainty regarding recoverability of dues from NHAI and MPRDC for specific subsidiaries.
  3. Arbitration proceedings initiated by Srinagar Banihal Expressway Limited against NHAI.
  4. Arbitration proceedings initiated by Sehore Kosmi Tollways Limited against MPRDC, which were dismissed by the Hon'ble High Court of Madhya Pradesh, with the subsidiary evaluating further legal options.
  5. Equity infusion of ₹1.00 million in Maha Integrated Life Sciences City Limited.
  6. Equity infusion of ₹0.51 million in RAMDIL EPC Works Limited.
  7. Equity infusion of ₹0.03 million in GP-IR Project Private Limited.

Corporate Governance

  1. Audit Committee reviewed and approved the unaudited consolidated and standalone financial results.

Management Discussion & Analysis

Future Strategy

  1. Pursuing arbitration proceedings for recovery of dues from NHAI.
  2. Evaluating further legal options against MPRDC for disputed claims.

Operational Focus Areas

  1. Resolution of outstanding arbitration cases and recovery of disputed amounts.
  2. Managing financial impact of project terminations and going concern issues for subsidiaries.

Performance Drivers

  1. Revenue from construction business and developer business.
  2. Other income contributions.
  3. Effective management of operating expenses and finance costs.

Risk Control Measures

  1. Initiated arbitration proceedings to recover deductions from NHAI, with management confident of full recovery.
  2. Evaluating further legal options against MPRDC following dismissal of arbitration proceedings.

Critical Risks

  1. Uncertainty regarding the outcome of arbitration proceedings with NHAI and MPRDC.
  2. Risk of non-recoverability of significant dues from government entities.
  3. Going concern nature of certain subsidiary companies affected by project terminations.
  4. Potential for further legal challenges and associated costs.