Titagarh Rail vs Jupiter Wagons: Railway stock that Jefferies is bullish on; target prices

Railway stocks: Jefferies has initiated coverage on two wagon makers namely Titagarh Rail Systems Ltd and Jupiter Wagons Ltd. While the foreign brokerage suggested 'Buy 'rating on Titagarh, implying 32 per cent upside, it started coverage on Jupiter Wagons Ltd with an 'Underperform' rating, indicating 22 per cent downside. Despite both the stocks trading at 40 times estimated FY27 earnings, Jefferies preferred Titagarh Rail over Jupiter Wagons, given stronger earnings growth prospects.

Titagarh Rail Systems | Buy | Target: Rs 810
Jefferies said Titagarh will be a key beneficiary of rising passenger and metro coach demand.  It estimated 35 per cent revenue and a 43 per cent EPS CAGR in FY26-30, led by 14 times rise in its passenger segment (PRS) revenues over FY26E-30E, with a strong order book (OB) lending visibility; and 1.4 percentage points PRS margin improvement as it moves up the technology value chain. 

"We expect RoE to double from 6 per cent in FY26E to 13 per cent by FY28E and 16 per cent by FY30E, led by rising plant utilisation. Our Rs 810 price target values Titagarh’s core business at 25 times March 2028E EPS and the upcoming wheel JV at 2.5x investment value. We believe valuation multiples are justified relative to those of industrial companies with similar EPS growth," it said.

Jupiter Wagons | Underperform | Target price: Rs 200

Jefferies said it estimated 23 per cent FY25-30 EPS CAGR for Jupiter Wagons against 43 per cent CAGR for Titagarh, given Jupiter Wagons' higher exposure to wagons. With valuations at 40 times FY27E PE, similar to Titagarh, it finds Jupiter too expensive for the growth differential. 

"Our Rs 200 price target values Jupiter Wagons' core business (ex-Wheel) at 20 times March 2028E EPS and its wheel manufacturing JV at 3.5 times P/BV," it said.

Sector outlook 
Jefferies expected a 10 per cent CAGR in India’s rolling stock capex over FY26-30, led by 9-16 per cent growth in passenger and metro coaches. Wagon demand, however, was seen growing at a slower 5 per cent CAGR, reflecting an estimated 6 per cent annual cargo growth for Indian Railways, lower than its 16 per cent target. It projected EPS CAGR of 43 per cent for Titagarh and 23 per cent for Jupiter over FY26-30.

The brokerage said railway capex growth would be driven by a 16 per cent CAGR in passenger coach spending, compared with 7 per cent in FY20-26E, supported by safety, modernisation and Vande Bharat trainsets. Locomotive spending was seen growing at 9 per cent CAGR, aided by freight corridor expansion, while wagon spending was expected to moderate to 5 per cent CAGR from 14 per cent earlier.

On urban transit, Jefferies viewed metro rail as a structural growth story, noting that India’s metro network expanded fourfold between FY14 and FY25 to around 1,000 km and is projected to double to 2,000 km by FY33E. It expected 9 per cent CAGR in metro coach investments over FY26-30, supported by network expansion and execution, with limited competition due to high entry barriers such as technology requirements and domestic procurement norms.

Jefferies highlighted that passenger coach investments would be led by modernisation. It estimated a 33 per cent CAGR in Vande Bharat trainset spending, driven by Indian Railways’ target of 800 trainsets by FY30E versus 164 currently, along with an 11 per cent CAGR in non-Vande Bharat spending. High-speed rail projects were seen providing growth visibility beyond FY30E, while potential exports of Vande Bharat trainsets remain an upside risk.

For wagons, the brokerage expected steady demand, with Indian Railways targeting 3 billion tonnes of cargo by FY30E. It estimated cargo growth to improve to 6 per cent CAGR over FY26E-35E from 4 per cent earlier, leading to a 5 per cent CAGR in wagon investments. Achieving the FY30E cargo target earlier would pose an upside risk.