Dhara Rail Projects IPO Deep Dive: Inside India’s Railway Maintenance Opportunity

Indian Railways spends billions keeping its trains running every single day, and Dhara Rail Projects operates in that invisible layer of maintenance and safety, now tapping the markets with an upcoming ₹50.20 crore IPO to scale its execution footprint. 

Let’s explore further:

Before the Deep Dive: What’s Working — and What Isn’t

Now that you’ve seen the snapshot, let’s unpack the full story behind these numbers and understand the business in context.

Railways Industry in India 

India’s railways are a big part of how the country is building its infrastructure. With a network of about 1,35,000 route kilometres, it’s one of the largest railway systems in the world. The rail infrastructure market itself is around ₹3–4 trillion and is expected to grow at roughly 8–10% every year over the next decade. This growth is coming from more electrified routes, new lines and capacity expansion, better stations, and dedicated freight corridors. Currently, Indian Railways runs over 13,000 passenger trains and earned about ₹2.7 lakh crore in FY25, showing how large and well-funded the system is.

What’s really changing now is the focus on upgrading and modernising the network. Government plans like the National Rail Plan 2030 and PM Gati Shakti are pushing long-term growth, while projects such as KAVACH are making the system more technology-driven. All of this creates a long runway for specialised contractors who can execute and maintain complex rail systems, not just build them and move on.

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Dhara Rail Projects traces its roots back to 2010, when it was incorporated to focus exclusively on railway-linked engineering and maintenance works. Early on, the company took over the running business of Dhara Industries, giving it immediate operating experience and entry into Indian Railways’ contractor ecosystem. Over time, it narrowed its focus to rolling-stock electrical systems and maintenance, building repeat relationships across multiple railway zones. The business model is built around recurring AMC and maintenance contracts, complemented by selective SITC works for electrical equipment.

Services Provided by the Company 

AMC & Repair – Train Lighting Equipment
Provides maintenance and repair of lighting systems in passenger coaches, including Vande Bharat trains. Scope covers LED and emergency lighting, wiring, control modules, and battery-backed units, with preventive checks, breakdown support, and component replacement.

AMC & Repair – OHE Maintenance Vehicles (Tower Wagons)
Undertakes preventive and corrective maintenance of tower wagons and inspection cars used in electrification works. Includes servicing of engines, brakes, power circuits, batteries, and mandatory safety inspections as per OEM norms.

AMC & Repair – Power Car Equipment
Maintains and repairs power car systems such as DG sets, alternators, distribution boards, batteries, fuel and cooling systems. Services include scheduled servicing, inspections, component replacement, and emergency fault response to ensure uninterrupted power supply.

AMC & Repair – HVAC Systems in Rolling Stock
Provides maintenance and breakdown repair for HVAC systems in coaches, covering filters, blowers, motors, ducts, and electrical controls to ensure passenger comfort and system reliability.

Supply, Installation, Testing & Commissioning (SITC)
Executes SITC of electrical equipment across rolling stock, including lighting systems, control panels, batteries, chargers, wiring, and HVAC electrical components, followed by testing and commissioning as per railway standards.

Outsourced En-Route Operations & Troubleshooting
Supplies technical manpower for real-time fault diagnosis and on-site troubleshooting during train operations, covering lighting, HVAC, batteries, fire detection systems, and passenger amenities to minimise delays and disruptions.

Order Book Status

Dhara Rail Projects has a current order book of ~₹144 crore, largely anchored in long-term AMCs and maintenance contracts with Indian Railways and OEM partners which generally last up to 3 years. The company is planning to execute these contracts progressively over the next 12–18 months, aligned with the expiry and renewal cycles of existing AMC agreements and scheduled railway maintenance windows. 

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The revenue mix has clearly pivoted toward direct railway contracts over time. From being heavily OEM-driven in FY23–FY24, the company now derives ~70–75% of revenue directly from Indian Railways, which typically offers better visibility and stronger client stickiness.

Zone Wise Revenue Mix

Revenue dependence on Central Railway has been steadily declining, from over 70% in FY23 to ~22% by Sep’25, which materially reduces zone concentration risk. At the same time, newer zones like East Coast and Eastern Railway are scaling up fast, signaling geographic diversification. It shows a more balanced execution footprint with less single-zone risk, and more pan-India relevance.

Management + Promoters 

Dhara Rail Projects is promoter-driven at its core, with the business led by Tejas Lalit Mehta (Chairman & Managing Director) and Jagruti Tejas Mehta (Whole-Time Director), the company’s main promoters. Both have been associated with the business since inception and bring over two decades of hands-on experience in executing railway projects and maintenance contracts. The company remains strongly promoter-driven, with key decisions, tendering, and execution oversight handled directly by the founding team.

Promoter shareholding stands at 98.33% pre-IPO and reduces to 72.36% post-IPO, still reflecting high skin in the game and alignment with shareholders.

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Revenue growth has been healthy through FY25, but the bigger shift is on the profitability side. EBITDA and PAT margins have expanded sharply by H1 FY26, helped by a higher share of AMC contracts and operating leverage. That said, PAT margins running above EBITDA margins point to high other income, largely from the sale of investments, which flatters bottom-line profitability and is not core-operational in nature.

On the cash side, the picture is mixed. Operating cash flows were negative in FY23–FY25 and only turned positive in H1 FY26, while receivable and inventory days remain elevated. What this really means is margins look strong on paper, but cash conversion and sustainability of non-operating income will be key things to track going forward.

Peer Analysis 

Dhara Rail Projects does not have any direct listed peers in the Indian market. As a result, the business is better benchmarked against execution track record, order visibility, margin sustainability, and working capital discipline rather than headline multiples.

IPO Objectives 

• Repayment and/or pre-payment of borrowings, in full or in part, to reduce leverage and strengthen the balance sheet.

• Funding working capital requirements, supporting the execution-heavy nature of railway AMC and maintenance contracts.

• General corporate purposes, providing flexibility for operational and business needs.

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Through the LMVT Framework

Leadership: A strongly promoter-led business with deep, on-ground experience in railway maintenance and electrical systems.

Moat: The business model is recurring in nature, driven by AMCs and repeat railway contracts, but there is no real structural moat. Entry barriers come from execution know-how and compliance rather than proprietary technology or exclusivity, making the model replicable over time.

Valuation: With no direct listed peers, valuation comfort hinges more on margin sustainability and cash conversion than headline multiples. Elevated PAT margins are partly supported by non-operating income, which warrants caution.

Tailwinds: Indian Railways’ long-term capex push, electrification, safety upgrades, and rising focus on maintenance of premium rolling stock support steady demand visibility.

Bottom line: A cash-generative-on-paper, execution-led railway services business with recurring revenue visibility, but limited moat. Long-term returns will depend less on growth and more on working capital discipline, cash-flow consistency, and promoter-led governance post listing.

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