The railway wagon sector in India has achieved remarkable growth, with Indian Railways producing a record 41,929 wagons in FY 2024-25, an 11 percent increase from 37,650 in FY 2023-24. This surge supports freight efficiency, benefiting industries like coal and steel while advancing India’s sustainability goals through reduced emissions.
Price Movement
With a market capitalization of Rs 9,914.01 crore, on Wednesday, the shares of Titagarh Rail Systems Ltd closed at Rs 736.15 per share, decreased around 2.95 percent as compared to the previous closing price of Rs 758.55 apiece.
Brokerage Recommendations
Geojit BNP Paribas, one of the well-known brokerages in India, gave a ‘Buy’ call on the railway stock with a target price of Rs 1,050 apiece, indicating a potential upside of 42 percent from Wednesday’s closing price of Rs 736.35 per share.
Brokerage Rational
As per the brokerage, Titagarh Rail Systems Ltd is a leading railway wagon manufacturer with 30 percent market share, serving both domestic and global markets. Strategic alliances like its 50:50 JV with Ramkrishna Forgings, consortium with BHEL, and partnership with ABB support its capabilities in propulsion, metro systems, and advanced rail products.
Titagarh secured Rs 1,106 crore worth of orders in 9MFY25 and holds an order book of Rs 25,333 crore, 6.2x FY25E sales. While revenue grew 2 percent YoY and PAT rose 6 percent YoY, EBITDA margins contracted slightly due to higher input costs. As per the brokerage, medium-term growth remains strong, backed by order inflows and capacity expansion.
Also read: Largecap stock in which HDFC Group made a fresh investment in Q4 FY25 to keep on your radar
New Business Verticals
The company has identified two new growth drivers: signaling and safety systems, and shipbuilding and maritime systems. With strong government focus, signaling is a key area of expansion. The shipbuilding business is being relaunched following the stabilization of its passenger rail systems operations, signaling diversified future growth.
Order Book
Titagarh Rail Systems Ltd secured orders worth Rs 1,106 crore in 9M FY25, including Rs 850 crore for Freight Rolling Stocks and Rs 256 crore for propulsion systems. As of December 2024, its order book includes 13,689 wagons and 1,589 Metro and Vande Bharat coaches.
Capacity and Production Goals
The company aims to produce 1,000 wagons per month, currently at 800-900. It plans to ramp up to 3,000 wagons per quarter. Metro coach production is set to reach 20 cars per month by FY26, with a long-term target of 25 cars per month by FY27.
Financial Outlook
The company reported EBITDA margins of around 10 percent for the quarter, aiming for 13 to 15 percent ahead. Freight business margins are expected to stay between 11 and 12 percent, with potential gains from operating leverage. Increased capex in shipbuilding and maritime systems is anticipated once business plans receive approval.
Industry Insights
The government’s goal of reaching 3 billion tons of freight by 2030 drives order flow, supported by increased railway capex. While challenges persist with wheel set supply, management remains confident in mitigation strategies and future production ramp-up, ensuring a positive industry outlook.
Company Overview
Titagarh Rail Systems Limited, formerly Titagarh Wagons Limited, is a supplier of passenger rolling stock, including metro coaches. The Company’s product range includes electric propulsion equipment such as traction motors and vehicle control systems.
Written by Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
