Share price of a leading Indian manufacturer of rail-based products surged 3.7 percent on BSE to Rs. 1,469.55 in the morning trading session of Thursday, as against its previous closing price of Rs. 1,417.15.
With a market cap of Rs. 19,451.6 crore, at 09:40 a.m., the shares of Titagarh Rail Systems Limited were trading in the green at Rs. 1,449.4, up by 2.3 percent.
The Vice Chairman and Managing Director of Titagarh Rail Systems, revealed that 50 percent of the company’s order book consists of its share of joint venture orders from Special Purpose Vehicles (SPVs), while the remaining 50 percent is divided between passenger and freight rail orders.
He expressed confidence that the upcoming demand will utilise the company’s existing capacity, indicating a positive outlook for the firm’s future growth prospects.
The company order book stood at Rs. 28,076 crore at the end of FY23-24, with the company expecting a strong order inflow this year.
To meet the demand for producing over 850 passenger coaches annually between Vande Bharat and Metro, Titagarh Rail is creating substantial capacity.
Titagarh Rail Systems is currently witnessing a period of substantial growth, driven by the robust demand in the rail industry.
With India’s overall wagon demand projected to be around 30,000-35,000 units a year, the company’s current annual production of 12,000 units positions it well considering the overall market scenario.
To meet this growing demand and expand into new areas, the company has allocated a total capex of nearly Rs. 1,000 crore, which will be utilized by FY25-26.
This investment will focus on enhancing its capacity for passenger coaches, upgrading facilities, pursuing backward integration initiatives, and undertaking special projects such as wheel production and more.
While freight wagons continue to be a key area of strength, the company is also optimistic about its passenger rail systems (PRS) division. Although initial contributions from PRS are expected in FY24-25, the company anticipates a significant inflection point in FY25-26 and FY26-27.
In FY24, the company closed the year with roughly 8,400 units manufactured, equivalent to a production rate of around 700 wagons, aligning with the company’s rated capacity. Looking ahead, the company anticipates a production rate ranging from 950 to 1,000 units in the
upcoming year.
Additionally, the company plans to commence production for the Surat and Ahmedabad metro projects in Q2 FY24-25, while the first train for the Bangalore Metro order is expected to be delivered by the beginning of July or Q2 FY24-25.
The company management anticipates a total capacity of 36 cars per month for the Metro business. Additionally, with the establishment of the Vande Bharat line, another 36 cars per month will be added. Therefore, the projected total capacity, expected to be achieved within approximately 2 to 2.5 years, is around 72 cars per month.
Furthermore, anticipate a potential enhancement in margins of around 50 basis points to 1% in the forthcoming quarters compared to the current level.
In terms of financials, the company’s consolidated revenue from operations stood at Rs. 1,052.4 crore in Q4 FY23-24 from Rs. 974.22 crore Q4 FY22-23, indicating a rise of 8.02 percent YoY, while the net profit grew by 63.6 percent from Rs. 48.24 crore to Rs. 78.95 crore, during the same period.
The stock has delivered multibagger returns of around 250 percent in one year, and nearly 40 percent of positive returns year-to-date.
Titagarh Rail Systems Limited, formerly known as Titagarh Wagons Limited, is mainly engaged in the manufacturing and selling of freight wagons, passenger coaches, metro trains, train electricals, steel castings, specialised equipments & bridges, ships, and more.
Written by Shivani Singh
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