Established in 1997, Titagarh Rail Systems Limited is a leading comprehensive rail mobility systems provider in India with over 25 years of experience. The Company is the largest wagon manufacturer with a market share of 18% to 22% in railway procurement in India in terms of total tenders and the largest market share of 25% to 30% in India in terms of total tenders from Fiscal 2020 to 2023. The Company is the only entity in private sector that manufactures both the freight rolling stock and passenger rolling stock.
FY2024 has been an unprecedented year as your Company not only reported outstanding growth in all key performance indicators, but also emerged as the only Company to have reached 1,000 Wagons milestone twice in the year under review during the 3rd and 4th quarter. Considering the highest ever order book position pursuant to the prestigious orders secured by the Company, the growth in revenues and Companys consistent efforts to execute the orders as per schedule, strategic alliances entered into, the past year has been exceptionally satisfying. a) Overall Review
The overall performance of the Company during the financial year 2023-24 was outstanding as is evident from the increase in all the key performance parameters. The robust order book aggregating Rs. 27,856 Crores as at
March 31,2024 which consists of orders worth Rs. 14,530 Crores is the Companys share and Rs. 13,326 Crores is the JVs share and focus on participation in various tenders for wagons and metro coaches to secure more orders to further consolidate the Companys position in rolling stock industry underlines its transformation from a wagons manufacturer to leading mobility solution provider.
(b) Segment Review
The Company operates under two segments namely:
(i) Freight Rail Systems (FRS) - Consists of manufacturing of Wagons, Loco Shells, Bogies, Couplers and its components. This segment encompasses our "Shipbuilding, Bridges and Defence" (SBD) business, in which we manufacture products including (i) coastal research vessels, naval vessels, passenger ships and cargo ferry vessels, and tugs; (ii) metal canisters, and integrated field shelters for the Indian Air Force; and (iii) bailey bridges, steel modular bridges and unibridges.
(ii) Passenger Rail Systems (PRS) - Consists of designing and manufacturing of Metro, Passenger Coaches for semi-high-speed trains, EMUs, Train Sets, Mono Rail, Propulsion equipment, Traction Motors and its components.
The segment wise performance is as follows:
Particulars |
Standalone |
Consolidated |
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2023-24 | 2022-23 | Change % | 2023-24 | 2022-23 | Change % | |
Segment Revenue (Gross) |
||||||
Freight Rail Systems |
341,757.39 | 225,093.47 | 51.83% | 341,757.39 | 225,093.47 | 51.83% |
Passenger Rail Systems |
43,572.65 | 52,959.43 | -17.72% | 43,572.65 | 52,865.57 | -17.58% |
Total |
385,330.04 | 278,052.90 | 38.58% | 385,330.04 | 277,959.04 | 38.63% |
Segment Results |
||||||
Freight Rail Systems |
44,324.07 | 23,570.92 | 88.05% | 44,324.07 | 23,570.94 | 88.05% |
Passenger Rail Systems |
1,315.09 | 2,198.14 | -40.17% | 1,315.09 | 2,198.13 | -40.17% |
Total |
45,639.16 | 25,769.06 | 77.11% | 45,639.16 | 25,769.07 | 77.11% |
Total Profit/ (Loss) before Tax from |
39,704.68 | 15,877.21 | 150.07% | 38,857.38 | 19,009.70 | 104.41% |
Total Profit/ (Loss) after Tax from discontinued operations |
(229.22) | (891.70) | 74.29% | |||
Total Profit/ (Loss) after Tax |
29,690.68 | 10,336.64 | 187.24% | 28,614.16 | 12,571.63 | -127.61% |
During the year under review, the revenue from Freight Rail Systems segment (FRS) is higher by 51.83% and PBDT by 88.05% as compared to the previous financial year. About 88.69% of the Companys standalone revenue has come from this segment. The Company has the largest installed capacity of 12,000 wagons per annum with state of the art facility at its Plant in Titagarh, W.B. and Bharatpur, Rajasthan.
The largest ever order received by FRS valued at over Rs. 7,800 Crore in May, 2022 has been executed to the extent of Rs. 3,203 Crore by the end of March, 2024.
During the year under review, the revenue from Passenger Rail Systems (PRS) is lower by 17.72% and PBDT by 40.17% as compared to the previous financial year, since the Pune metro project reached near completion and the other orders under PRS were in the initial stage i.e. design phase. About 11% of the Companys standalone revenue for FY 23-24 has come from PRS. The Company is uniquely positioned to capture growth with its modern-day Passenger Rail Systems Technology and installed capacity of 250 coaches per annum. The capacity of traction motors is 2,400 per annum.
Under the Passenger Rail Systems Segment (PRS), the Pune Metro Project is a very important milestone for the Company. The Company along with its associate: TFA, had signed the first contract for design, development, manufacture and supply of 34 trains of 3 coaches each for Pune Metro (Maharashtra Metro Rail Corporation Limited). The delivery of the Coaches to Pune Metro has already commenced and the trains supplied have been put into passenger service.
The following significant developments took place during the FY 23-24:
* In consortium with Bharat Heavy Electricals Limited (BHEL), your Company was awarded "Manufacturing cum Maintenance of 80 Vande Bharat Trainsets including Up-gradation of the Government Manufacturing Units & Trainset Depots" and comprehensive maintenance of the same for 35 years in the mega tender of Indian Railways. The BHEL-TRSL consortium was the only AatmaNirbhar consortium that participated in the tender process. A special purpose vehicle (SPV) will be formed between the consortium partners to carry out the maintenance of the trains. It is a matter of great pride for the Company to be a part of the Governments Make in India policy. This marks the Companys entry into high-speed trains segment i.e. the Vande Bharat
* Your Company in consortium with Ramkrishna Forgings Limited (RKFL) incorporated a Joint Venture Company (JVC) in the name and style of "Ramkrishna Titagarh Rail Wheels Limited" (RTRWL) on 9th June, 2023, for execution of the Project "Manufacturing and Supply of Forged Wheels" under long term Agreement under AatmaNirbhar Bharat.
* The fitment trials for the traction motor supplied in November, 2022 were completed successfully in June, 2023 and the clearance for bulk supply has been received in July, 2023. Your Company is now fully equipped to undertake unrestricted supply in developmental category.
* Among other major achievements, your Company received Letter of Acceptance dated June 27, 2023 from the Gujarat Metro Rail Corporation Limited (GMRCL) for "Design, Manufacture, Supply, Testing, Commissioning and Training of 72 nos. of Standard Gauge Cars for Surat Metro Rail Phase-I Project". The order value is about INR 857 crore and execution would start 76 weeks after signing the contract and is scheduled to be completed in 132 weeks thereafter.
* Your Company was awarded the contract for Design, Manufacture, Supply, Testing, Commissioning & Training of 30 nos. of Standard Gauge Cars for Ahmedabad Metro Rail Phase-II Project by GMRCL valued approx. Rs. 350 Crore.
* The Company has entered a strategic partnership with ABB to supply propulsion systems for metro rolling stock projects in India. This strategic partnership aims to bring the two companies together to build on their potential and synergy to become an established player in the Indian market and expand its market base to other projects and countries. The partnership covers an agreement for Titagarh to purchase ABB propulsion systems including traction converters, auxiliary converters traction motors and TCMS software. It also includes securing manufacturing rights and production license or traction motors along with the complete transfer of technology of the GoA 4 (Driverless metro) TCMS software from ABB to Titagarh. This partnership is aligned with the Indian governments "Make in India" and "Atmanirbhar Bharat" initiatives and has had an early success by wining orders to design and supply equipment for metro coaches for the state of Gujarat, one of the leading industrialised state in India.
* Strategic alliance entered with Sidwal Refrigeration Private Limited, a wholly owned subsidiary of Amber Enterprises India Limited, by investment in a special purpose vehicle (SPV) to set up new facility in India to manufacture critical railway components & subsystems used in the manufacture of Railway & Metro coaches.
The Companys order book stands at Rs. 27,421 crore as at June 30, 2024, of which Rs. 14,095 crore is the Companys share and Rs. 13,326 crore is the JVs share. The order book is well diversified across the different segments of the Company and going forward the revenue mix of the Company will undergo a substantial change with the increase of share of passenger rail systems.
Metro coaches is one segment in which the Company foresees a huge opportunity as the tier-I and tier-II cities are all going for metro as the most suitable urban rapid transport system.
The Companys performance during FY 2023-24 has been record breaking as it reported its highest ever quarterly revenue of Rs. 1,052.41 Crore during 4th quarter of FY 24, which represents a growth of 8% as compared to last quarter of FY 2022-23. During the year under review, the Company has attained major successes through the supply of its first traction motor from the Companys state-of-the-art facility in Uttarpara, paving the way for the potentially a large market which can be used for the manufacture of metro cars.
"Make in India" initiative coupled with launch of Dedicated Freight Corridor (DFC), metro projects across all major Indian cities is expected to boost wagon and electrical train manufacturing industry in the country. The DFC wagons are expected to add to Companys revenues in near future.
The efforts are also on to develop an export market for both the freight wagons and transit train business. International certification and application for accreditation of services have already been completed for wider acceptance of its products globally. Efforts are being made to take the presence of the Company beyond Europe through the Italian associate engaged in transit train manufacturing. The Indian and Italian operations would also be further synergised to cover the global market for both the freight wagons and transit business.
(c) Industry overview of Business Segments Indian Railways
The Indian railway system is regarded as the foundation and lifeblood of the economy. Indian railways span thousands of kilometres practically covering the entire nation, making it the fourth largest in the world after the US, China, and Russia. The Railway Board, which has a monopoly over the provision of rail services in India, oversees the whole infrastructure and continue to be the most popular means of transportation for most Indians when travelling long distances.
Indias railway network is recognised as one of the largest railway systems in the world under single management. The railway network is also ideal for long-distance travel and movement of bulk commodities, apart from being an energy-efficient and economic mode of conveyance and transport. Indian Railways is the preferred carrier of automobiles in the country.
The government of India has focused on investing in railway infrastructure by making investor-friendly policies. It has moved quickly to enable Foreign Direct Investment (FDI) in railways to improve infrastructure for freight and high-speed trains.
Budgetary Support - Under the Interim Budget 202425, a capital outlay of Rs. 2.52 lakh crore (US$ 30.3 billion) has been allocated to the Ministry of Railways, which is the highest ever outlay and about ten times the outlay made in 2013-14. The government allocated US$ 29 billion to the Ministry of Railways. The Bairabi- Sairang project aims to create an additional 51.38 km of railway track in northeast India. Indian Railways will be establishing three key railway programs to boost the economy: energy, mineral, and cement transport routes; port connections; and busy traffic routes. There will be conversion of 40,000 conventional rail bogies to Vande Bharat standards.
The Indian Railways completed total revenue of Rs. 2.40 lakh crore (US$ 28.75 billion) by the end of FY24. Total number of passengers increased by 52 crore to reach 648 crore in FY 2023-24. In FY24, freight loading crossed by 1500 MT against last years loading of 1512 MT in FY23. In FY24, Indian Railways loaded 1,434.03 MT of freight from April to February, an increase of about 66.51 MT and revenue rose by approximately US$ 778 million (Rs. 6,468 crore) compared to the same period last year. Since August 2020, the Indian Railways has run 450 Kisan Rail services and was able to transport over 1.45 lakh tonnes of agricultural produce & perishables RailTel, a PSU under the Railway Ministry, which provides fast and free Wi-Fi across the stations. In 2024-25, railways capital expenditure is targeted at US$ 30.33 billion (Rs. 2.52 lakh crore).
Indian Railways plans to market semi-high speed Vande Bharat trains by 2025-26, aiming to cover 10-12 lakh kilometres on 75 trains in three years. The Government of India aims in launching 400 Vande Bharat train (16 coaches) in the next 3-4 years and 1,000 mini-Vande Bharat train (8 coaches) in next 3-4 years. Indian Railways will target European, South American, and East Asian markets for exporting Made in India trains.
Freight Rolling Stock
In the financial year 2023-24, 7180 route kilometers of railway tracks were electrified, surpassing the 6,565 route kilometers of tracks electrified last year.
During the financial year 2023-24, the railways recorded 1591 million tonnes (MT) surpassing the previous years loading of 1512 million tonnes (MT). The total revenue of Indian Railways stands at Rs. 2.40 Lakh crores from Rs. 2.23 Lakh crores last year, reporting an increment of Rs. 17000 crores.
Indian Railways has prepared a National Rail Plan (NRP) for India-2030. This plan aims to create a future ready Railway system by 2030. The NRP aims to formulate strategies based on both operational capacities and commercial policy initiatives to increase modal share of the Railways in freight to 45%. The objective of the Plan is to create capacity ahead of demand, which would cater to future growth in demand right up to 2050. As part of the National Rail Plan, Vision 2024 has been launched for accelerated implementation of certain critical projects by 2024.
The railway sector in India aims to contribute about 1.5% to the countrys GDP by building infrastructure to support 45% of the modal freight share of the economy. In order to aid the freight transportation facilities across the country two Dedicated Freight Corridors (DFC) one on the Western route (Jawaharlal Nehru Port to Dadri) and another on the Eastern route (Ludhiana to Dankuni) have been fast tracked.
Indian Railway is striving to achieve a share of 45% from the current 26% through a combination of capacity enhancement works and lowering of cost to customers by FY30. Annual freight target expected to increase from 1,500m tonnes to 3,000m tonnes by FY27 and 3,600m tonnes by FY30. Wagon demand is expected to increase to 5.4 lakh wagons by FY31 from 3 lakh wagons in FY22 (including replacement).
Outlook
The Indian Rail Freight Industry is experiencing significant growth and improvements, with ambitious plans and increased investment aimed at enhancing capacity, efficiency, and sustainability. Annual freight target is expected to increase from 1400m tonnes to 3000m tonnes by 2027 implying an increase in the wagon fleet from current ~336,900 to ~500,000 by 2027. Additionally, plans are underway to develop 100 PM Gati Shakti Cargo terminals for multimodal logistics within the next three years. The wagon industry, which previously faced challenges due to under-utilization of capacities, is expected to witness improvement with substantial orders from Indian Railways and the private sector. With the commissioning of dedicated freight corridors and a goal to increase the share of freight transport through railways, the Indian Railways plans to procure 90,000 wagons by 2025 which is the largest in history and it is nearly 5 times the number of wagons procured by railways in a year.
Passenger Rolling Stock
The Indian Railways passenger rolling stock is poised for unprecedented growth of INR 4,74,735 crores over the next five years. This remarkable surge is fueled by substantial budget allocation and a series of ambitious infrastructure projects highlighting the industrys growth potential and exponential growth possibilities.
The Indian Railways has also introduced Vande Bharat trainsets, the Regional Rapid Transit System (RRTS) projects and various metro initiatives across the country which has significantly boosted the markets outlook towards passenger rolling stock. The railway sector is set to grow at a Compound Annual Growth Rate (CAGR) of 45.94%, while metro sector is expected to grow at a CAGR of 38.57%. This forecasted annual growth further highlights the growth potential of India railways and metro sector and thereby presents a golden opportunity for component suppliers to deliver high quality products essential for these initiatives. The government is also proposing Metro Lite and Metro Neo lines which are suitable for smaller cities with lower peak traffic.
India currently has 750 Km of operational metro lines with over 2,500 metro coaches being deployed. The metro network, including RRTS is proposed, to be expanded to 1,700 Km across 27 cities by 2025 and subsequently to 50 cities. IR is expected to procure 8,000-9,000 incremental passenger coaches between FY22-26. With proper budgetary allocation, the forthcoming metro rail expansion will aim to provide efficient, reliable, and sustainable transit options for millions of urban commuters, ultimately transforming the urban transit landscape and addressing the growing demand for public transportation in densely populated cities. As India continues to invest in and expand its metro network, it is poised to become a global leader in urban transit systems.
Outlook
The concerted efforts towards developing urban mass transit systems and modernizing the Indian Railways have paved the way for improved passenger experiences and increased transportation efficiency across the country. The significant progress in metro services, introduction of Vande Bharat Express and strategic investments in rail infrastructure bodes well for the future development and sustainability of Indias transportation networks.
(d) Discussion on Financial Performance with respect to Operational Performance
The Company has initiated a substantial portion of the capex of about Rs. 600 crore on capacity/infrastructure building including development of new metro trains coaches and propulsion configurations and the balance is set to be deployed in the next fiscal. The capex is aimed at streamlining the supply chain and improving the operating margins through appropriate backward integration of components in both the segments. All plants of the Company are ISO 9001: 2015 and ISO 14001:2015 certified. Continuing focus of the management is consistently on undertaking cost rationalization, better manufacturing processes, improved productivity and optimization of resource for improvement in performance aimed at achieving results better than the trend witnessed in the industries in which the Company operates. Viewed in this backdrop, the Companys performance for the year under review is satisfactory.
(e) Overall outlook for the current year
In addition to the healthy order book as on date, the Companys focused approach on margins through efficient working capital management, backward integration and supply chain management fixed cost reduction in terms of consolidating the common functions and reducing duplication of manpower, forward integration, consolidating its prominent position in the Rolling Stock business coupled with the access to the technology for
Metro Coaches and diversified product portfolio, strategy of adopting innovative ways to cater to its customers and preparedness to seize opportunity in products/projects for Metro and defence establishment of India make the outlook for the current year encouraging. The Company is well positioned to leverage sector growth.
(f) Key Financial Ratios
As stipulated in the Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), as amended, the Company reports as follows:
(i) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios or sector specific ratios, along with detailed explanations therefor:
Sl. No. Key Financial Ratios | 2023-24 | 2022-23 | Difference (%) |
1. Debtors Turnover Ratio (days) | 38.44 | 31.37 | 22.54% |
2. Inventory Turnover Ratio (days) | 60.17 | 65.67 | -8.38% |
3. Interest Coverage Ratio (times) | 6.77 | 3.82 | 77.43% |
4. Current Ratio (times) | 2.71 | 1.27 | 113.39% |
5. Debt Equity Ratio | -0.12 | 0.22 | -154.55% |
6. Operating Profit Margin (%) | 12.91% | 11.09% | 16.47% |
7. Net Profit Margin (%) | 7.71% | 3.72% | 107.26% |
Notes on significant changes in financial ratios where change is > 25%:
Interest Coverage Ratio: Variation is attributable to increase in borrowings during the year.
Current Ratio: Variation is mainly due to increase in current assets on account of increase in Cash and Cash Equivalents as at year end.
Net Profit Margin: Variation is mainly due to increase in profitability and turnover during the current year.
(ii) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:
Key Financial Ratios |
2023-24 | 2022-23 | Difference (%) |
Return on Net Worth (%) |
|||
- Before considering exceptional item |
17.82% | 21.29% | -16.32% |
- After considering exceptional item |
17.82% | 16.49% | 8.07% |
Notes on significant changes in financial ratios where change is > 25%: The increase is primarily due to increase in earnings as compared to the increase in volume of operations.
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