HSBC has maintained its 'Buy' rating on Titagarh Rail Systems while lowering its target price to Rs 1,425 per share from Rs 1,980, citing delays in the execution of metro projects and slower-than-expected progress on Vande Bharat orders.
The revised target suggests an upside of nearly 18 percent from the previous closing price of Rs 1,210. Year-to-date, the stock has surged over 22 percent, outperforming the Nifty 50's 11 percent gain during the same period.
HSBC has cut its revenue and EPS estimates for FY26 and FY27 by 9-11 percent.
On a brighter note, the resumption of metro rolling stock awards after state elections highlights a strong opportunity pipeline for the company.
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Titagarh Rail, formerly Titagarh Wagons, is a key player in manufacturing freight wagons, passenger coaches, metro trains, train electricals, and specialised equipment, catering to both domestic and export markets.
The company reported a 14.3 percent year-on-year increase in net profit to Rs 80.7 crore for Q2FY25, compared to Rs 70.6 crore in the same quarter last year. Revenue from operations grew by 13 percent to Rs 1,057 crore as against Rs 935.5 crore in the corresponding period of the preceding fiscal.
At the operating level, EBITDA (earnings before interest, tax, depreciation, and amortisation) increased by 12.4 percent to Rs 129.5 crore in Q2FY25, compared to Rs 115.2 crore in the same period of the previous fiscal. The EBITDA margin remained flat at 12.3 percent during the quarter.
In H1FY25, the company secured orders worth approximately Rs 459 crore across its business segments. This includes Rs 250 crore worth of orders for freight rolling stocks and Rs 209 crore for propulsion systems. As of September 2024, the order book comprised approximately 14,560 wagons and 1,592 metro and Vande Bharat coaches.
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