Edelweiss' research report on Texmaco Rail & Engineering
Texmaco Rail & Engineering’s (Texmaco) Q4FY18 top line stood flat YoY with rail EPC division compensating for lower wagon revenues (down 37% YoY). Better performance by the foundry and rail EPC divisions led to EBITDA margin surging 410bps YoY to 8.7%. Texmaco group’s order book rose to ~INR45bn (~INR36.7bn at FY17 end), aided by improving opportunities across verticals – wagons, coaches, locomotives, foundry and rail EPC.
Outlook
We believe the company is on course to emerge as a ‘total rail solution provider’. We maintain ‘BUY’ with SoTP value of INR140 (based on 25x FY20E EPS of Texmaco and Bright Power) and believe the recent stock correction provides excellent entry point for investors.
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