The stock of a leading rail mobility solutions provider has received a buy recommendation from a domestic brokerage, anticipating a potential upside of 38%.
Titagarh Rail Systems Ltd. is engaged in the manufacturing of 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 38 percent year on year, from ₹2,780 crores in FY22-23 to ₹3,853 crores in FY23-24. During the same period, Net Profit increased by 127 percent, from ₹126 crores to ₹286 crores.
On Tuesday, Titagarh Rail Systems Ltd shares were trading at ₹1,443 a share, down 2.03 percent from the previous close price on the Exchange, and the company has a market capitalization of ₹19,446 crores.
The company’s shares have delivered a multi-bagger return of 110 percent over a year. A shareholder investment of ₹ 1 lakh in the company would be worth ₹ 2.20 lakhs in a year.
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Domestic brokerage Nuvama gave ‘buy’ on the Titagarh Rail Systems Ltd shares for a target price of ₹1,988 per share, representing an upside of 38% from Tuesday’s trading price of ₹1,443 per share.
Further, Morgan Stanley has assigned an ‘Overweight’ rating to Titagarh Wagons Ltd, as the brokerage believes the company will benefit from Indian Railways’ plan to procure 90,000 wagons by 2025.
Nuvama noted that Titagarh Wagons Ltd is well-positioned to benefit from the rising demand for custom-made wagons following the commissioning of the Dedicated Freight Corridor (DFC).
To reduce its reliance on the wagon segment, Titagarh Rail has expanded into the rapidly growing coach sector. The acquisition of Firema has allowed the company to enter the expanding Metro rail market, while Cimmco has strengthened its presence in the high-potential defense sector, which is expected to boost future order inflows, according to Nuvama.
The company’s order book was valued at ₹28,076 crore at the close of FY23-24, with strong order inflows anticipated for the coming year. To meet this growing demand and explore new areas, the company has earmarked nearly ₹1,000 crore in capital expenditure, to be utilized by FY25-26.
In FY24, the company produced approximately 8,400 units, averaging around 700 wagons per month, in line with its rated capacity. For the upcoming year, the company projects a production rate between 950 and 1,000 units.
For the Metro business, management expects a total capacity of 36 cars per month, with an additional 36 cars per month from the new Vande Bharat line. This will bring the total projected capacity to around 72 cars per month, expected to be achieved within the next 2 to 2.5 years.
Written by Omkar Chitnis
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