Titagarh Rail Systems, the leading wagons stock in the railway sector, outperformed its counterparts IRFC, IRCTC, RVNL and BEML on May 7, with its share price rallying to nearly 9% with an intraday high of Rs 1,124.10 apiece on BSE. The reason behind the stellar buying despite the bearish market is that global brokerage Morgan Stanley has initiated coverage on Titagarh.
Titagarh Wagons Morgan Stanley:
Giving an overweight on Titagarh, Morgan Stanley believes that the company is set to be a beneficiary as the government transforms Indian railways.
Titagarh is benefitting from its dominance in the freight business and enhancing its footprint in the passenger business.
According to Morgan, the freight business is a cash cow for the company, while the passenger business is a new growth engine. The brokerage hence estimates a strong 28% earnings CAGR on Titagarh throughout FY24-FY27.
Also, Titagarh is well-placed to drive growth in exports through its low-cost local manufacturing.
Thereby, Morgan Stanley has set a target price of Rs 1,285 apiece on Titagarh, a new all-time high. The target is fair as per the brokerage considering Titagarh's strong earnings visibility and improvement in return ratios.
Titagarh Wagons Share Price:
At the time of writing, Titagarh's share price traded at Rs 1,111.25 apiece, up by 7.4% on BSE with a market cap of Rs 14,965.62 crore.
The stock's 52-week high and low is at Rs 1,249 apiece and Rs 321 apiece respectively.
YTD, the stock has gained by 7%, while in a year, the stock rallied by a whopping 227%.
Recently, Titagarh launched its second 25T Bollard Pull Tug, Bahubali, for the Indian Navy. The ship is built at the Company's facility located in Titagarh, Barrackpore. The launch is part of the six 25 BP tugs order secured by the Company in November 2021 from the Indian Navy under the Ministry of Defence's Make in India initiative.
In March, the company also accepted the offer from the Railway Board for the Manufacture and supply of 4,463 BOSM Wagons for a contract value of Rs 1,909.04 crore.
In February, the company bagged an order from the Defence Ministry for Procurement of 250 Specialized Wagons. The order value is approximately Rs 170 Crore. Execution of the contract is scheduled to start 12 months after the signing of the contract and complete in 36 months.
Titagarh Rail Systems Limited (TRSL) offers mobility solutions to billions with its prominent presence in both the Passenger and Freight Rail Systems including railway wagons, components, passenger coaches (EMU/MEMU) and Metro Coaches. TRSL is the largest private-sector manufacturer of railway wagons and an established player in passenger coaches.
TRSL is also the co-recipient of prestigious orders for Vande Bharat trains & Forged Wheels.
The government's vision of 2024 has been envisaged for achieving the 2024 MT freight loading target by 2024.
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the stock mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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