Railtel Corpn. (RAILTEL)
Fast GrowerFairStock Score: 61/100 — STEADY
Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1
Key Financials
| Current Price | ₹282.15 |
| Market Cap | ₹9,055.28 Cr |
| P/E Ratio | 26.17 |
| ROCE | 21.84% |
| ROE | 16.25% |
| Dividend Yield | 1.15% |
| Profit Growth | 25.2% |
| Debt/Equity | 0.03 |
| Sales Growth | 27.6% |
| Free Cash Flow | ₹173.03 Cr |
| Promoter Holding | 72.84% |
| 52-Week Range | ₹245 — ₹412.9 |
| Sector | Telecom - Services |
| Book Value | ₹70.47 |
Strengths
- Near-zero leverage: D/E 0.02, with positive FCF of ₹173 Cr.
- High promoter holding of 72.84% aligns interests and provides stability.
- Solid capital returns: ROE 15.90% and ROCE 21.84%.
- Strong operational quality: Piotroski F-Score 8/9 and sales growth of 30.48%.
Concerns
- Valuation is stretched: P/E 30.94, P/B 5.25, PEG 3.17, and dividend yield only 0.91%.
- Price ₹327.30 is far above Graham Number ₹117.87 and DCF intrinsic value ₹61.36; margin of safety is -166.11%.
- Profit growth of 20.51% lags sales growth of 30.48%, and latest quarter net margin is below 7%.
- Altman Z-score of 2.68 is in caution territory, and EV/EBITDA of -48.70 warrants scrutiny.
AI Analysis
Railtel is the kind of business Graham would call quality -- but only at the right price. The balance sheet is spotless: debt/equity of 0.02, promoter holding of 72.84%, a Piotroski score of 8/9, and free cash flow of ₹173 Cr. Returns on capital are respectable: ROE 15.90%, ROCE 21.84%. Sales grew 30.48% and profits 20.51%, so there is real momentum. Yet I am a buyer of value, not just growth. At ₹327.30, the market capitalises Railtel at ₹10,066 Cr, or 30.94 times earnings and 5.25 times book. Graham would calculate an intrinsic value of only ₹117.87; a conservative DCF says ₹61.36. That leaves a margin of safety of negative 166%. Even a wonderful business becomes a poor investment when you overpay. The PEG ratio of 3.17 confirms growth is fully priced, and profit growth lagging sales growth -- 20.51% versus 30.48% -- hints at margins under pressure. The latest quarter tells the same story: ₹913 Cr of revenue but only ₹62 Cr of net profit, below 7% net margin. Altman Z-score of 2.68 sits in the caution zone. This is not a broken business; it has no debt and strong parentage, and cash flows are positive. But I cannot call a 31 P/E with a 0.91% dividend yield a Graham bargain. In investing, patience is a virtue. I would put Railtel on my watchlist and wait for a price that offers a real margin of safety, not a negative one.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer