Texmaco : The Indian railway industry has always been known for staying strong and bouncing back from challenges. In recent years, this reputation has proven true, as many railway companies have seen consistent growth with strong order books and steady profits made.
One big reason for the railway industry’s steady performance is the help it gets from the Indian government. The government supports the industry in different ways, like giving money for important projects, choosing companies for contracts, and starting new railway development projects. This support is a key factor in keeping the railway sector stable and thriving
One such company that has had a great growth trajectory is Texmaco Rail and Engineering Ltd. The company’s stock has given a stellar return of more than 300% in just a yea. As of Q3 of FY24, the company’s order stands at Rs 8,517 crore. With this, let’s dive deep into the company’s business, segments, its financials over the years, and future outlook. Will it have the same growth trajectory in the future also?
Table of Contents
Texmaco Rail & Engineering Ltd.
Business Overview
Texmaco Rail & Engineering Ltd. is a prominent player in the manufacturing sector, specializing in the production of Rolling Stock, including Wagons, Coaches, EMUs, Loco shells & parts, Hydro Mechanical Equipments, Steel Castings, Rail EPC, Bridges, Freight cars and other steel structures.
Texmaco has emerged as a reliable and leading freight car manufacturer with a business history spanning over eight decades. The company’s diversified product portfolio is a result of strategic technical collaborations with renowned multinational partners from countries such as Japan, the USA, the UK, Germany, Australia, Austria, Holland, etc.
TEXMACO has been a reliable freight car manufacturer for eight decades, serving core industries like cement, steel, defense, fertilizer, oil, alumina, thermal power projects, and chemical plants. The company is the sole exporter of railway castings from India. They export to niche countries like the USA, Australia, Eurasia, etc. The export had a substantial increase in FY23 standing at an amount of Rs 140 crores as compared to 95 crores in FY22. Let’s now get an understanding of the company’s divisions and their revenue split
Freight cars
Texmaco Rail & Engineering Ltd. is a company that makes different types of freight cars for trains. They help the Indian Railway by creating strong and reliable freight cars for carrying goods across the country. They also design special cars for specific needs, like carrying different types of goods or serving unique purposes.
Texmaco is known for using different materials like mild steel, stainless steel, and composite materials to make their freight cars, showing their commitment to trying new and innovative things in the railway industry. Texmaco has established itself as a leading and reliable freight car manufacturer and contributes to around 45% to the company’s revenue.
Rail Infra
In the Rail Infra & Others division, Texmaco focuses on contributing to the development and modernization of railway infrastructure. This includes projects related to rail electrification, track laying, and other critical components that enhance the efficiency and safety of the railway network.
Steel Foundry
Texmaco Rail & Engineering Ltd.’s Steel Foundry is a standout player in India. It’s the largest foundry in the country that has international recognition. Not only is it the biggest for making castings used by Indian Railways, but it’s also the top exporter of these railway castings in India.
The foundry doesn’t just manufacture in India – it makes important parts for freight cars like bogies and castings, and these go to different countries also. It’s not just about trains; this foundry also makes things for the Ministry of Defence, Marine, and mining industries. And if that’s not impressive enough, it’s a key player in creating the crossings and turnouts needed for high-speed railways. So, in simple words, this foundry is a big deal both in India and around the world.
Component Systems & Solutions
Texmaco Rail & Engineering Ltd.’s Component Systems & Solutions division is a global partner in sourcing precision parts and systems. They provide accurately crafted pieces and solutions. This division is not just about making things; it helps global partners by supplying parts for things like train bogies, passenger rolling stock, and metro rail components.
Texmaco isn’t just working with local companies; it’s also partnering with big international players. Moreover, they are busy creating components for the insides of passenger trains, making travel more comfortable for people. In simple terms, Texmaco is the go-to team globally for well-made parts and solutions that keep trains and metro systems running smoothly.
Source: Investor Presentation
Key Business Developments
Robust Order Book Composition
Texmaco Rail & Engineering Ltd. has a strong order book of about INR 8,517 crores, showcasing its diverse capabilities. The main part of this is the rolling stock, like trains, with a whopping INR 5,400 crores.
Other important divisions also contribute – Kalindee division with INR 1,000 crores, Bright Power Division with INR 550 crores, Hydromechanical Bridges with INR 100 crores, and Steel Foundry with INR 500 crores.
Global Presence and Export Success
Texmaco is doing well internationally, especially in the U.S., where it’s selling a lot of its foundry products. There’s also a growing demand for Texmaco’s products in African countries, and Europe is becoming interested too, mainly because of issues in the supply chain from Ukraine. Texmaco is keeping a close eye on these markets and has a dedicated team for exports.
Strategic Initiatives and Financial Outlook
Texmaco has got the nod to raise to INR 500 crores, and they’ve got some good reasons for it. Some of it will go for day-to-day expenses (working capital), some for rail projects (Rail EPC), some to pay off high-cost loans, and some for important spending (capital expenditures). These funds will help Texmaco manage its money smartly.
Record-Breaking Orders and Collaborations
Texmaco recently got its biggest order ever – over 20,000 freight cars from Indian Railways, and they’re working hard to fulfill it. They’ve also teamed up with Hindalco to make aluminum freight cars, expanding their product range. There’s another collaboration in Europe with M/s. NYMWAG CS, a big wagon maker, to make even more wagons and parts together.
Operational Achievements in Steel Foundry
Texmaco’s Steel Foundry Division is doing great, making a lot of steel castings. They’re using both their facilities in Belgharia and Urla to make 3,000 metric tons of castings every month. They’ve got big orders from Indian Railways and even from BRADKEN in Australia, showing that their products are in demand.
Strategic Focus on Railway Infrastructure
To make things simpler, Texmaco decided to separate its construction and project divisions into a new part of the company. This new part will focus solely on building railway projects, making Texmaco more efficient in doing what it does best – making railways better.
What does the future hold for the company?
Texmaco Rail & Engineering Ltd.’s future outlook is marked by strategic initiatives aimed at solidifying its position in the railway industry and expanding its global footprint. The strategic alliance with Hindalco for Aluminum freight cars is poised to make Texmaco a qualified supplier to the European region. This move aligns with the growing emphasis on lightweight and fuel-efficient freight cars, positioning Texmaco to meet evolving market demands.
Furthermore, Texmaco’s joint venture with WABTEC focuses on manufacturing world-class braking systems and components for the domestic and U.S. markets. By re-engineering existing product lines and adopting a market-focused approach, Texmaco aims to create centers of excellence and achieve cost reduction.
In line with its future goals, Texmaco aims to increase its share of exports and sales to private parties across all segments. They are planning to manufacture 1,000 freight cars per month, scaling up production capacity. Texmaco envisions becoming debt-free within three years, signaling financial prudence and stability. The strategic decision to demerge non-core businesses reflects Texmaco’s focus on optimizing its operational structure.
The company anticipates significant opportunities in the railway sector, as Indian Railways plans to procure 1,50,000 freight cars by 2025. Texmaco is well-positioned to benefit from strong government infrastructure spending, particularly in rolling stock, where wagon manufacturers have received orders exceeding the total of the last 10 years.
Looking globally, Texmaco aims for 3-5x growth in the export of components and railway castings. Becoming a qualified supplier to foreign players and leveraging geopolitical shifts in supply chains are key elements of Texmaco’s strategy to expand its global reach.
In Closing
In summary, Texmaco Rail & Engineering Ltd. is strategically positioning itself for future growth through technological advancements, global expansion, and a focus on operational efficiency. The company’s vision includes becoming a major player in both domestic and international markets, benefiting from industry trends, and contributing to the evolving landscape of the railway sector.
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Written by Akshita Maloo
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