Titagarh Rail hits new high on positive outlook; stock up 379% in a year

Shares of Titagarh Rail Systems (TRSL) (formerly Titagarh Wagons) rallied 6 per cent to hit a new high of Rs 449.95 in Monday’s intra-day trade.

In the past two trading days, the stock of India's largest wagon manufacturer has surged 8 per cent after the consortium of TRSL and Ramkrishna Forgings (RK Forgings) won contract to supply 1.54 million forged wheels under Atmanirbhar Bharat initiative by Ministry of Railways.

With the two-day gain, the stock of TRSL has zoomed 379 per cent in a year, as against 23 per cent rise in the S&P BSE Sensex, during the same period.

A consortium between RK Forgings and TRSL was done to manufacture and supply 15.4 lakh forged wheels over a span of 20 years, under the Atmanirbhar Bharat Initiative by Ministry of Railways, Government of India.

The contract will see the consortium delivering 40,000 forged wheels during the first year, 60,000 wheels in the second year and 80,000 wheels every subsequent year thereafter, with the total contract valued at Rs 12,226.5 crore.

In April, these companies had announced that the consortium of RK Forgings and Titagarh Wagons (RKFL-TWL Consortium) received the Letter of Award (LOA) from the Ministry of Railways, Government of India.

TRSL offers mobility solution to billions, with its prominent presence in both Passenger and Freight Rolling Stock. TRSL is the largest private sector manufacturer of Wagons and established player in railway coaches (EMUs, MEMUs).

TRSL recently received the largest-ever order for Wagons from Indian Railways and is currently also executing the order for 104 Metro Coaches for the Pune Metro.

While TRSL is India's undisputed leader in the wagon manufacturing space, now it is also among India's very few integrated manufacturers of passenger rail systems.

Analysts at Antique Stock Broking believe that the company has created a manufacturing set-up, which is difficult to replicate, and has the capacity to grow its turnover to over Rs 9,000 – Rs 10,000 crore over the next five years.

“We expect TRSL to post earnings CAGR of 53 per cent over FY23-26E, and generate an average RoE of over 25 per cent. TRSL's stock has meaningfully appreciated in the past year, led by a nearly doubling of profit in FY23. Yet, at 12x FY25E earnings, the stock is cheap and does not capture TRSL's long-term growth potential,” the brokerage firm added.