Rs 39 to Rs 504: This railway stock turned into a multibagger in three years; trading near record high

Shares of multibagger Titagarh Rail Systems Ltd have delivered multibagger returns in the last three years. The railway stock, which closed at Rs 39 on July 31, 2020 closed at Rs 504.55 on June 30, 2023, clocking 1193% returns for investors during the period. In comparison, Sensex has risen 85.36 per cent in three years. In the previous session, Titagarh Rail stock ended flat at Rs 504.55 on BSE. Earlier, the stock opened higher at Rs 512 against the previous close of Rs 509.10 on BSE. It hit a record high of Rs 529.20 on June 28, 2023 and a 52 week low of Rs 100.30 on June 29, 2022. 

In terms of technicals, the relative strength index (RSI) of the stock stands at 77.2, signaling it's trading in the overbought zone. Titagarh Wagons shares have a beta of 0.8, indicating low volatility in a year. Titagarh Wagons shares stand higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.   

The share has climbed 122% this year and 395% in a year. Total 1.27 lakh shares of the firm changed hands amounting to a turnover of Rs 6.39 crore in the previous session. Market cap of the firm fell to Rs 6032.20 crore.   

Arihant Capital Markets sees the stock rising to Rs 686 in a year.  

The brokerage said, “Titagarh Rail Systems has a strong order book of Rs 275.5 bn (9.9x of FY23 revenue), well positioned to benefit from freight wagons, Vandhe Bharat Trains, Metros, and global wagon tenders, Italy's business net profitability is expected in FY24, Capacity expansion, backward integration, New orders for Vandhe Bharat Trains and Wheelsets will drive business growth going forward. Our initial price objective of Rs 495 has been achieved. However, in a Bull Case Scenario, We maintain our “BUY” rating and valued the stock at 20x of its FY25E EPS, and arrived at a price objective of INR 686, an upside of 35.8%." 

Antique Stock Broking has initiated coverage on the stock with a “buy” call. The brokerage has set a target price of Rs 694 based on 20 times its FY25 earnings, implying a 54 percent upside.    

Titagarh Rail Systems, a leader in the wagon manufacturing space, now is also among India's few integrated manufacturers of passenger rail systems, the brokerage firm said. The company has created a manufacturing setup which is difficult to replicate and has the capacity to grow its turnover to over Rs 9,000-10,000 crore over the next five years, it said   

“We expect TRSL (Titagarh Rail Systems) to post earnings CAGR (compounded annual growth rate) of 53 percent over FY23-26, and generate an average RoE (Return on Equity) of over 25 percent,” it said.   

Titagarh Rail Systems plans to invest Rs 600 crore over the next three years and recently proposed raising of Rs 289 crore by selling shares to a large investor. This, along with strong cash flow expected in the future, would help the wagon maker meet its growth goals, the brokerage said.   

Abhijeet from Tips2trades said, "Titagarh Rail Systems is overbought and slightly bearish on the Daily charts with strong resistance at Rs 529. A daily close below support of Rs 469 could lead to a sharp fall till Rs 410-355 in the near term."

Nine promoters held 47.83 per cent stake in the firm and 1,07,836 public shareholders owned 52.17 per cent or 6.23 crore shares for the quarter ended March 2023. Of these, 1.04 lakh public shareholders held 2.77 crore shares or 23.17% stake with capital up to Rs 2 lakh. Only 16 shareholders with 5.07% stake held capital above Rs 2 lakh for the quarter ended March 2023.    

In the March quarter of last fiscal, Titagarh Rail Systems posted net profit of Rs 48.24 crore against Rs 24.95 crore loss during the quarter ended March 2022. However, sales zoomed 102% to Rs  974.22 crore in Q4 against Rs 480.94 crore during the quarter ended December 2022.      

For the fiscal ended March 2023, the firm reported a profit of Rs 130.20 crore against a loss of Rs 0.33 crore in the year ago period. Sales zoomed 44% to Rs 2779.59 crore in the last fiscal against Rs 1930.79 crore for the fiscal ended March 2022.    

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.     

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