Shares of Titagarh Rail Systems, formerly Titagarh Wagons, surged 6 percent on June 19 morning to hit a 52-week high at Rs 449.95, with Antique Stock Broking initiating coverage with a “buy” rating. The brokerage firm has set a target price of Rs 694 based on 20 times its FY25 earnings, implying a 54 percent upside from the day’s high.
At 9.43 am, the share was up 4.2 percent on the BSE at Rs 443.
While Titagarh Rail Systems, a leader in the wagon manufacturing space, now is also among India's few integrated manufacturers of passenger rail systems, the brokerage firm said.
The company has created a manufacturing setup which is difficult to replicate and has the capacity to grow its turnover to over Rs 9,000-10,000 crore over the next five years, it said.
“We expect TRSL (Titagarh Rail Systems) to post earnings CAGR (compounded annual growth rate) of 53 percent over FY23-26, and generate an average RoE (Return on Equity) of over 25 percent,” it said.
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The stock has meaningfully appreciated in the past year, led by a nearly doubling of profit in FY23. The brokerage firm also added that the stock is cheap at 12 times FY25 earnings and does not capture the long-term growth potential of Titagarh Rail Systems.
The stock has shot up over 300 percent in the past year and has risen over 1,300 percent in three years.
Titagarh Rail Systems plans to invest Rs 600 crore over the next three years and recently proposed raise Rs 289 crore by selling shares to a large investor. This, along with strong cash flow expected in the future, would help the wagon maker meet its growth goals, the brokerage said.
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