Titagarh Rail shares fall 6% from record high; can they cross Rs 1,100 mark?

Shares of multibagger Titagarh Rail Systems Ltd have started this week on a weak note with the railway scrip slipping almost 4% intraday today. With this correction, the Titagarh Rail Systems stock has lost 6% from the record high of Rs 994.95 on BSE. Titagarh Rail shares hit an all-time high on November 17 (Friday). Titagarh Rail Systems stock slipped 3.92% intraday to Rs 936.15 against the previous close of Rs 974.35 on BSE. Market cap of the firm slipped to Rs 11,945 crore. Total 0.93 lakh shares of the firm changed hands amounting to a turnover of Rs 8.86 crore. 

Despite today’s correction, Titagarh Rail stock has clocked multibagger returns of 451.36% in a year and zoomed 910% in two years. The stock has clocked positive returns in all time periods up to 10 years. The stock hit a 52-week low of Rs 163 on November 22, 2023.     

It has a one-year beta of 0.6, indicating very low volatility during the period.   

In terms of technicals, the relative strength index (RSI) of the stock stands at 78.8, signaling it's trading in the overbought zone. Titagarh Rail Systems shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.          

Here’s a look at the outlook and latest target prices for the railway stock.   

SBI Securities has assigned a target of Rs 988 for Titagarh  Rail shares.  

“Titagarh Rail maintains a substantial order book worth Rs 28,212 crore, with both Freight Rolling Stocks and Passenger Rolling Stocks making significant contributions. With a planned capital expenditure (capex) of Rs 600 – Rs 700 crore over the next three years, the stock is well-positioned for growth,” said the brokerage.   

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher said, “The stock has witnessed resistance near the Rs 1,000 zone and has slipped to some extent with profit booking seen with the RSI cooling off from the highly overbought zone. As mentioned earlier, the overall bias is maintained positive with major support zone lying near Rs 870 levels. The near term support would be at Rs 920-924 levels from where one can expect the stock to consolidate and get ready for further upside move. With strength sustaining, the next upside target visible is near Rs 1105 levels.” 

Nuvama Institutional Equities has raised its share price target to Rs 949 from Rs 776 earlier.   

"Execution of the wagon order from the Indian Railways is progressing well; the company achieved highest-ever dispatch of 759 wagons in September. Titagarh Rail is benefiting from surging railway capex. We are raising the target P/E to 33 times from 30 times and FY24E and 25 EPS estimates by 5 per cent and 4 per cent, respectively," Nuvama said.   

Nuvama said the inorganic route is propelling the growth trajectory for Titagarh Rail Systems and that the railways linked company is well entrenched in the wagon segment, having beefed up the business in its near two decade journey.   

HSBC Global Research has raised its target price of Titagarh Rail Systems to Rs 970 from Rs 900 as the order backlog shows strong visibility to the growth outlook.  It has retained its buy rating for the stock.   

"Q2 results improve our confidence in Titagarh’s execution capabilities," the brokerage said.   

As the largest wagon manufacturer and an emerging leader in passenger coaches, Titagarh Rail is benefiting from the government’s thrust to put more freight onto rails as well as the modernisation of passenger rail transportation, said HSBC.   

Revenue climbed 54% year-on-year, led by 70% growth in the freight rail systems segment, while passenger rail systems growth was soft at plus 7%, HSBC said.   

“Revenue climbed 3% quarter-on-quarter which was in line with our expectation. Profitability was impressive, with the EBITDA margin coming in at 13.5% (up 320 basis points y-o-y, 60 basis points q-o-q)," the note said. Although strong profitability was expected, given high wagon shipments from the private market, it said.    

"We maintain our FY24-26 revenue forecasts but raise FY24e EPS by 13% and FY25e-26e EPS by 4-6%. With a significant jump in profit in FY25e (75%), we expect profit to grow at a 30% CAGR over the next two years, with an average ROIC of 23% over FY24e-26e," HSBC said.   

Abhijeet from Tips2trades said, "Titagarh Rail is slightly bearish on the Daily charts with strong resistance at Rs 995. A daily close below support of Rs 925 could lead to target of Rs 818 in the near term." 

Titagarh Rail Systems logged a 46.5% rise in net profit to Rs 70.6 crore in Q2 against a net profit of Rs 48.2 crore in the September 2022 quarter. Total revenue climbed 54.1% to Rs 935.5 crore in Q2 against Rs 607.1 crore in the corresponding period of the preceding fiscal. Earnings per share rose to Rs 5.56 in the September 2023 quarter against Rs 3 in the September 2022 quarter.   

Profit before tax zoomed 112% to Rs 94.39 crore in the September quarter against Rs 44.45 crore in the September 2022 quarter.   

About the Company          

Titagarh Rail Systems is engaged in the manufacturing and selling of freight wagons, passenger coaches, metro trains, train electricals, steel castings, specialised equipment and bridges, and ships. The company operates through three segments: freight rolling stock, passenger rolling stock, and shipbuilding, bridges & defence.         

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions. 

 

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