Railway Stock Jumps 5% After Announcing Q3 Results and Securing ₹411 Cr KAVACH Equipment Order

Synopsis: Kernex Microsystems shares rose 5% after winning a Rs. 411.17 crore order from Banaras Locomotive Works for 505no’s of On-board KAVACH Loco systems, enhancing its railway signalling and safety equipment presence. The 12-month contract includes supply, installation, testing, and commissioning per RDSO specifications.

The shares of the Small-Cap company specializing in the design, development, manufacture, and maintenance of anti-collision systems, railway safety, and signaling systems are in focus upon securing  Rs. 411.17 Crore Order from Banaras Locomotive Works.

With a market capitalization of Rs. 2,032.93 Crores on the Day’s Trade, the shares of Kernex Microsystems India Ltd jumped upto 4.56 percent, reaching a high of Rs. 1294.55 compared to its previous close of Rs. 1238.00.

What Happened

Kernex Microsystems India Ltd, engaged in the design, development, manufacture, and maintenance of anti-collision systems, railway safety, and signaling systems, has received a major order from Banaras Locomotive Works (BLW), Varanasi, valued at Rs. 411.17 Crores (including GST). 

The order is for the supply, installation, testing, and commissioning of 505 nos of On-board KAVACH Loco equipment, as per the latest RDSO specifications. The contract will be executed over a period of 12 months. This marks a significant business win for Kernex Microsystems, strengthening its presence in the railway signaling and safety equipment sector.

Q3FY26 Results

Its Revenue from operations rose by 97 percent YoY from Rs. 36.8 Crores in Q3FY25 to Rs. 72.5 Crores in Q3FY26, and it rose by 54 percent QoQ from Rs. 47.1 Crores in Q2FY26 to Rs. 72.5 Crores in Q3FY26.

Its Net Profit YoY declined by 15 percent from  Rs. 7.13 Crores in Q3FY25 to Rs. 6.05 Crores in Q3FY26, and on a QoQ basis, it declined by 7.2 percent from Rs. 6.52 Crores in Q2FY26 to Rs. 6.05 Crores in Q3FY26. The earnings per share (EPS) for the quarterly period stood at Rs. 3.61, compared to Rs. 3.87 in the previous quarter.

Kernex Microsystems (India) Ltd., founded in 1991 and based in Hyderabad, is a technology company specializing in designing, developing, and manufacturing safety systems for the railway industry, including the Kavach train collision avoidance system. As a 100% Export Oriented Unit (EOU), it provides embedded solutions, anti-collision devices, and software services globally. 

The company been committed to providing a broad range of high-value-added embedded R&D services and Electronics Manufacturing Services (EMS/CEM), enabling customers to maximize and optimize their resources and apply their core strengths in research and development (R&D), design, and marketing. These services benefit end-users and customers in accelerating the time-to-market of a broad range of applications.

The company demonstrates strong financial performance, reflected in a robust ROCE of 23.8% and an impressive ROE of 38.0%, supported by a conservative debt-to-equity ratio of 0.51. With a PEG ratio of 0.49, the stock appears attractively valued relative to its earnings growth.

Over the last five years, the company has achieved exceptional profit growth, posting a 44.0% CAGR. Operational efficiency has also improved, evidenced by a significant reduction in debtor days from 69.6 to 45.5, indicating faster collections and better working capital management.

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