Shares of a prominent Indian rail mobility solutions provider experienced an upward trajectory on Tuesday, marking a gain of 8.7% following a buy recommendation from an international brokerage firm, projecting a potential upside of 17%.
Titagarh Wagons Ltd. is engaged in the business of manufacturing railway wagons, defense hardware, naval ships for the armed forces, and mining equipment. The company has a presence in domestic and international markets.
Company revenue has increased by 25 percent year on year, from ₹766 crores in Q3FY23 to ₹955 crores in Q3FY24. During the same period, Net Profit increased by 127 percent, from ₹33 crores to ₹75 crores.
The company’s shares have delivered a multi-bagger return of 137 percent over a year. A shareholder investment of ₹ 1 lakh in the company would be worth ₹ 2.37 lakhs in a year.
International brokerage Morgan Stanley initiated an overweight rating on the stock for a target price of ₹1,285 per share, representing an upside of 17% from Tuesday’s trading price of ₹1,104 per share.
The brokerage highlighted Titagarh’s freight segment as a significant revenue generator, with the passenger business poised to drive growth. Morgan Stanley predicts a robust 28 percent earnings compound annual growth rate (CAGR) from fiscal year 2024 to fiscal year 2027.
During fiscal years 2025 to 2027, freight wagon production is projected to reach approximately 1,000 wagons per month. Additionally, the brokerage stated that the passenger coach segment is expected to witness the execution of 26, 76, and 96 coaches per quarter in fiscal years 2025, 2026, and 2027, respectively.
Titagarh Rail possesses the potential to support export growth through cost-effective local manufacturing, with the brokerage anticipating positive outcomes due to the company’s involvement in the prominence of the Indian railways.
Morgan Stanley stated that Titagarh stands to gain significantly from the rail sector, emphasizing its expertise in designing, manufacturing, supplying, commissioning,
and servicing a wide array of rolling stock and metro coaches. They highlighted Titagarh’s improving earnings outlook, attributing it to key policy initiatives like ‘AtmaNirbhar Bharat’ and ‘Make in India’.
In March 2024, Titagarh Rail Systems received an order from Ministry of Railways worth ₹ 1,909.04 crore. The company will manufacture and supply 4,463 BOSM Wagons for a contract value of ₹ 1,909.04 crore
Written by Omkar Chitnis
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