Titagarh Rail Systems: Railway Stock Gains 330% YTD, Surpasses SBI Securities Samvat 2080 Target

Titagarh Rail Systems, smallcap stock, is nearing towards its Rs 1,000 mark! Year-to-date, the stock has given remarkable returns of whopping over 330%. Not just that last week, the stock even surpassed SBI Securities' target price set for Samvat 2080.

On November 24th, Titagarh Rail stock ended at Rs 980.30 apiece, up by 1.9% on BSE with a market cap of Rs 12,466.58 crore. During this trade, the stock had touched an intraday high of Rs 994.30 apiece -- which is higher from SBI Securities target price of Rs 988 for Samvat 2080.

Last week, the stock ended with an upside of 2%. But its monthly gains are nearly 32%, and in six months, the stock has zoomed by 183% on BSE. Year-to-date, the stock has skyrocketed by 331.76% on the exchange.

In its investment rationale, SBI Securities highlighted 5 key reasons why invest in Titagarh Rail shares. These are:

1. Healthy 2QFY24 performance (Standalone):

Revenue stood at Rs 935 cr (+54% YoY/+3% QoQ). EBITDA stood at Rs 115 cr (+109% YoY/+8% QoQ). EBITDA margin improved by 321 bps/65 bps YoY/QoQ to 12.3% vs 9.1% in Q2FY23. PAT stood at Rs 71 cr (+4.9% YoY and net loss of Rs 11.9 cr in 2QFY23).

2. Robust Order Book & Capex:

Order Book as of 30th September'23 stood at Rs 28,212 cr. The break-up was as follows: (a) Freight Rolling Stocks (FRS) - Rs 14,342 cr (51%) and (b) Passenger Rolling Stocks (PRS) - Rs 13,870 cr (49%). The management has guided a capex of Rs 600 - Rs 700 cr over the next three years.

3. Freight Rolling Stock:

The management re-iterated the execution of wagon rolling stock is now stabilized at 600-700 wagons per month and is expected to be 1,000 wagons per month by the end of FY24. The company achieved the highest-ever dispatch of wagons (i.e. 759 wagons) in the month of Sept'23. The management alluded EBITDA margin to sustain around 10%-11%.

4. Passenger Rolling Stock:

The management alluded to reaching its first production target of 15-20 coaches by mid of FY25 and reaching a full capacity of 70-75 coaches within 3 to 3.5 years. Current capacity utilization - 20-25%. The total passenger rolling stock opportunity (Metro projects) is worth Rs 500bn - Rs 700bn. The company aims to gain market share with the ramp-up of capacity going ahead. It is the only company with both stainless steel and aluminium body production technology.

5. Indian Railway Tender:

Titagarh is well placed in the new floated tender by Indian Railways for 20,000 wagons. The management stated that this is only for one type of wagon & it expects other tenders to come out as well in the due course of time.

Nevertheless, Antique Stock Broking's latest call on Titagarh shares is 'BUY' for a target price of Rs 1,013.

Titagarh Rail Systems 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. It also designs and manufactures wagons such as container flats, grain hoppers, cement wagons, clinker wagons and tank wagons. Its business is divided into four divisions: Railway Freight, Railway Transit, Engineering and Shipbuilding.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.