Titagarh Rail shares fall over 2% as Morgan Stanley reduces target price, but reiterates "overweight" call

Over the past six months, shares of Titagarh Rail Systems have nearly halved

Shares of Titagarh Rail Systems declined 2.5 percent to Rs 757 apiece on February 27, as Morgan Stanley has reaffirmed its "overweight" stance on the stock but trimmed its target price to Rs 1,090 per share from Rs 1,300. Despite the revision, this still suggests a potential upside of 40 percent from current levels.

Morgan Stanley highlighted that the inadequate supply of freight wheelsets from Indian Railways is expected to hinder earnings offtake. Additionally, the execution of passenger projects for Vande Bharat has been delayed by nine months due to modifications in the car design plan. As a result, analysts anticipate that these near-term execution challenges will weigh on Titagarh’s revenue trajectory moving forward.

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"We are reducing Titagarh's FY25 and FY26 earnings estimates by 14 percent and 7 percent, respectively, as the passenger segment has not secured any new orders since October 2023. Execution of the Ahmedabad Metro project is also set to commence in Q1FY26," Morgan Stanley noted.

In Q3, the company reported a 16 percent year-on-year (YoY) decline in net profit, amounting to Rs 62.8 crore, while revenue from operations slipped 5.5 percent to Rs 902.2 crore. On the operational front, EBITDA dropped 9.6 percent to Rs 100.1 crore, with the EBITDA margin standing at 11.1 percent for the reporting quarter.

Meanwhile, the board of Titagarh Rail Systems has given the green light to subscribe to the rights issue of equity shares by Titagarh Firema Engineering Services.

Recently, the company also secured a letter of acceptance (LoA) from Ambuja Cements and ACC Ltd to manufacture and supply 16 BCFCM rakes with BVCM wagons. The order, valued at Rs 537.11 crore, is slated for completion between January 2026 and March 2027.

Over the past six months, shares of Titagarh Rail Systems have nearly halved, in contrast to the Nifty 50’s 10 percent decline.