💰 Financial Performance

Revenue Growth by Segment

The company operates in a single reportable segment (Railway Safety Systems). Revenue grew significantly to INR 189.88 Cr in FY25 from INR 18 Cr in FY21, representing a turnaround driven by the execution of KAVACH (TCAS) orders.

Geographic Revenue Split

Primarily India-based revenue (approx. 99%+) from Indian Railways contracts. The company maintains a wholly-owned subsidiary, Avant-Garde Infosystems Inc, in the USA, though its current revenue contribution is negligible.

Profitability Margins

Operating profit margin stood at 21.55% in FY25. Net profit for FY25 was INR 50.92 Cr, a significant recovery from a net loss of INR 20.41 Cr in FY24, aided by a deferred tax credit of INR 17.54 Cr.

EBITDA Margin

Operating Profit before working capital changes was INR 49.27 Cr in FY25 (approx. 26% margin) compared to a loss of INR 12.24 Cr in FY24, reflecting improved absorption of fixed overheads.

Capital Expenditure

Capital expenditure for FY25 was INR 4.13 Cr, primarily for property, plant, and equipment to support manufacturing scaling.

Credit Rating & Borrowing

CARE Ratings assigned a 'CARE BBB-; Stable' rating for long-term bank facilities (INR 175 Cr) and 'CARE A3' for short-term facilities (INR 100 Cr) in November 2025.

⚙️ Operational Drivers

Raw Materials

Electronic components, PCB assemblies, sensors, and communication modules for TCAS units, representing approximately 60-70% of total project execution costs.

Import Sources

Not disclosed in available documents, though high-end electronic components are typically sourced from global semiconductor hubs.

Capacity Expansion

Current production capacity is 450 Kavach Units per month and 10 Level Crossing Gates per month (scalable to 25 units per month). The facility spans a 10-acre campus with 265,000 sq. ft. of infrastructure.

Raw Material Costs

Project execution expenses rose to INR 22.47 Cr in FY25 from INR 5.92 Cr in FY24 (up 280%) as project delivery accelerated.

Manufacturing Efficiency

Turnaround in FY25 indicates high capacity utilization compared to previous years where high fixed overheads led to losses.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Growth is driven by the mandatory implementation of KAVACH (Train Collision Avoidance System) by Indian Railways. Strategy involves leveraging its position as one of only three RDSO-approved vendors and utilizing its 450 units/month capacity to capture a large share of the national rollout.

Products & Services

KAVACH (TCAS) units, Level Crossing Gates, Railway Safety Systems design, and Turnkey Project Execution.

Brand Portfolio

Kernex, KAVACH (patented technology).

New Products/Services

Expansion into Telecom and Defense sectors using embedded and IoT product design services.

Market Expansion

Targeting pan-India railway networks for KAVACH installation and maintenance.

Market Share & Ranking

One of the top 3 players in the Indian Railway safety (KAVACH) market.

Strategic Alliances

Kernex TCAS JV (80% share), VRRC KERNEX CE RVR JV (35% share), and KERNEX VRRC JV (80% share).

🌍 External Factors

Industry Trends

The industry is shifting toward mandatory automated safety systems (KAVACH) across the entire Indian Railway network, moving away from manual signaling.

Competitive Landscape

Limited competition with only two other major players (HBL Power and Medha Servo) approved for KAVACH technology.

Competitive Moat

Sustainable moat through patented technology and the 'RDSO Approved' status, which acts as a massive entry barrier due to the multi-year testing and validation process required.

Macro Economic Sensitivity

Highly sensitive to Indian Government/Railway budgetary allocations for safety infrastructure.

Consumer Behavior

Not applicable (B2G model).

Geopolitical Risks

Trade barriers on electronic components could impact input costs for TCAS manufacturing.

⚖️ Regulatory & Governance

Industry Regulations

Strict adherence to Research Designs and Standards Organisation (RDSO) specifications and SIL-4 (Safety Integrity Level) standards is mandatory for all products.

Taxation Policy Impact

Effective tax benefit in FY25 due to deferred tax credit of INR 17.54 Cr.

Legal Contingencies

Pending income tax disputes at the Commissioner (Appeals) level for AY 2019-20 (INR 0.92 Cr) and AY 2020-21 (INR 3.92 Cr). Statutory auditors qualified their report regarding non-recognition of impairment loss of INR 12.76 Cr for the US subsidiary.

⚠️ Risk Analysis

Key Uncertainties

Internal control weaknesses noted in discrepancies between bank statements and books (up to INR 29.77 Cr difference with HDFC Bank in Q1 FY25).

Geographic Concentration Risk

Over 95% of revenue is concentrated in the Indian market, specifically with the Ministry of Railways.

Third Party Dependencies

High dependency on RDSO for product approvals and project timelines.

Technology Obsolescence Risk

Risk of technology shifts in railway signaling; mitigated by continuous R&D in TCAS/KAVACH.

Credit & Counterparty Risk

Receivables from government entities (Railways) are generally secure but subject to long working capital cycles; trade receivables increased to INR 14.44 Cr in FY25.