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This railway stock soared 14% today, hitting new high on heavy volumes

In the past two months, the stock of Titagarh Wagon has zoomed 58% after the company reported healthy YoY revenue growth of 71% and healthy operating margin of ~10% in the first nine months of FY23

Vande Bharat Express

SI Reporter Mumbai

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Shares of Titagarh Wagons (TWL) hit a new high of Rs 343.75, soaring 14 per cent on the BSE in Thursday's intra-day trade, amid heavy volumes in an otherwise subdued market.

At 01:07 pm, the stock of the railway wagon maker was trading 11 per cent higher at Rs 332.50, as compared to 0.02 per cent decline in the S&P BSE Sensex. The average trading volumes on the counter jumped over three-fold today with a combined 6.3 million equity shares, representing 5.3 per cent of total equity of TWL, having changed hands on the NSE and BSE so far in trades.

In the past two months, the stock has zoomed 58 per cent after the company reported healthy year-on-year (YoY) revenue growth of 71 per cent and healthy operating margin of 10 per cent in the first nine months of fiscal 2023 (9MFY23) driven by improved order execution. The company executed a large order from the Indian Railways (IR) in the freight wagon segment in May 2022 and Pune Metro in line with expectation.

Last week, TWL had announced that its consortium with Bharat Heavy Electricals Ltd (BHEL) (BHEL-TWL Consortium) has bagged an order worth Rs 9,600 crore to supply 80 sleeper class Vande Bharat trains to IR over the next six years.

The order for the annual maintenance contract (AMC) has also been placed for 35 years. The order is for supply of 80 trains each at a cost of Rs 120 crore, excluding taxes and duties. The consortium will also equip, upgrade, operate, and maintain the exclusive place provided in the manufacturing unit at ICF Chennai and two depots assigned by the Indian Railways.

Earlier, the consortium of Ramkrishna Forgings and TWL (RKFL-TWL Consortium) had received a Letter of Award (LoA) from the Ministry of Railways for manufacturing and supply of forged wheels under long term agreement under Aatma Nirbhar Bharat.

The company said the size of contract was Rs 12,226 crore for manufacturing and supply of 1.54 million forged wheels of different rolling stocks to the Ministry of Railways over a period of 20 years in accordance with the terms and conditions of the agreement.

IR has been focused on pursuing growth with emphasis on the Make in India policy under Aatma Nirbhar Bharat initiative of the Government. TWL offers mobility solution to billions with its prominent presence in both the Passenger and Freight Rolling Stock. TWL is the largest private sector manufacturer of Wagons and an established player in railway coaches (EMUs, MEMUs).

During 9MFY23, TWL's operating profit before depreciation, interest and tax (OPBDIT) rose to Rs 169 crore from Rs 116 crore in the corresponding period of the previous fiscal. The operating margin dropped to 9.4 per cent from 11 per cent, in line with expectation, on account of a larger proportion of low-margin orders in the freight segment.

CRISIL Ratings expects the operating margin to sustain over the medium term on account of price variation clauses in orders from IR, which will mitigate any volatility in commodity prices, and execution of private sector order book where margins are generally higher.

The execution of the order book while maintaining profitability and working capital cycle will remain a key monitorable. TWL has to match the L1 price bid for receipt of letter of approval for the Vande Bharat order. Historically, this segment has low profitability and ability to improve the margin is a monitorable, the rating agency said in rationale.

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First Published: Apr 20 2023 | 1:30 PM IST

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