Titagarh Rail Systems: Robust macros to drive growth

15 Feb 2024 , 03:20 PM

Analysts of IIFL Capital Services hosted Titagarh’s management at IIFL’s Investor Conference in Mumbai. The management emphasized that increased budgetary allocation for IR is supporting demand. Further, budgetary announcement on conversion of 40k bogies to Vande Bharat standards with prime focus on rolling stock to augur well for growth given 50% market share in the space. Focus on increasing wallet share, with larger emphasis on localisation through JVs to elevate growth and profitability. Titagarh is hopeful of OPM expansion with better capacity utilisation and execution of higher margins projects in FY25/26. Better domestic positioning, international expansion, and a consistent increase in wallet share to catapult growth over the next 3-4 years. 

JVs to enhance wallet share: 

Management highlighted recent JVs to increase wallet share significantly for the company within passenger and freight coaches. Strategic partnership with ABB India to supply propulsion systems, HVAC and components supply through JV with Amber to increase offerings. Further, JV with Ramkrishna For gin gs to manufacture forged wheels to provide annuity income for the company. 

Flurry of orders in Metro: 

Execution of Pune metro to enhance learning curve where it has delivered 27 train sets till Dec’23 and expect to deliver remaining train sets in FY24. Further, received an order from CRRC to manufacture coaches for Bengaluru metro where 34 train sets will be manufactured by company and will be delivered by Aug’25. It is also participating in Surat and Ahemdabad metro project where first prototype train will be delivered in Oct’ 24 and Dec’24 respectively. Margins in Pune metro is minimal at 2% however expect it to improve to 8-10% in Ahmedabad and Pune. 

Vande Bharat orders:

Agreement between the company and BHEL will lead to supply and maintenance of 80 semi-high speed trainsets (1,280 coaches). The first 2 prototype train is to be delivered within 24 months. The delivery of 12 trains will be made in first year, 18 trains in second year and 25 trains from year 3 onwards.