The chart suggests that higher levels are coming in the short term
The business is having tailwinds as of June 2023
The management is acting confidently and boldly- what i want to see
Most of all, the order book and the new JV with RK Forgings is value creating in nature.
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So they are not going to make anything in this Vande Bharat contract or may even lose money.
Good set of nos.
Good updates…
considering what they were saying till Q423.
This is mgmt’s response
Disc: Invested, buys in last month also.
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Mgmt. interview post Q1 numbers
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Titagarh Wagons Q2 FY24 Concall Highlights
Order Book
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Received LOA from GMRCL for Design, Manufacture, Supply, Testing, Commissioning & Training of 30 nos. of Standard Gauge Cars for the Ahmedabad Metro Rail Phase-II Project with an order value of appx Rs. 350 Cr.
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The company has finalized significant wagon orders from private customers in the past few months (~Rs 1200cr), thereby taking the wagon order book from private players to ~26% of the overall FTRS order book
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The Company has achieved the highest-ever dispatch of wagons i.e., 759 wagons in September 2023
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The company has launched the first Diving Support Crafts (DSC) which will be inducted into the Indian Navy’s Southern Naval Command Clearance Diving Teams (CCDT) and will provide diving assistance during underwater repair, maintenance, and salvage operations on ships inside designated harbours
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The order book mix of private wagons and freight wagons keeps on changing each quarter
Margins
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The private orders margins are normally higher
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Given the company now has higher efficiency and more volumes, the margins should sustain in the 11% range in the long run for the freight wagon business
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The low margins in PRS of 2-3% are due to low volumes. As the volume increases to about 15-20 cars a month, which they expect they can achieve by Q2 FY25, the margins should increase to around 10%. Once the backward integration is started (the propulsion and components business), they can see another 2-3% improvement in EBITDA margins in the business
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The current strategy currently is to be in the train ecosystem with forward integration in the Vande Bharat space and backward integration in the components space
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On receivables- The receivables have grown substantially this quarter. However, according to the management, these are normal receivables and not overdue receivables and the management is not worried about it
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The industry is an open industry and anybody can enter the industry. Normally, a new entrant takes around 3-5 years to become a regular manufacturer
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The wagons are a domesticated industry since the logistics costs are generally very high
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Titagarh Rail has order book 8 times the trailing 4 quarters Sales.As per HSBC analysis, Titagarh’s execution capability indicates strong growth visibility
Discl: invested planning to add in declines. not a buy sell recommendation.
I may be biased. Please do your own assessment before investing in this volatile market.
Railways plan 3000 additional trains in next 4-5 years to minimise waitlisted tickets
If the pian is executed , Titagarh wagons and passenger coach maker is likely to get benefited. The other beneficiaries could be IRCTC , IRFC, Railtel, RVNL/Ircon.
Discl: invested at lower level.Not a buy or sell recommendation. pl do your own assessment before investing
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ABB India has formed a strategic partnership with Titagarh Rail Systems Ltd for the supply of propulsion systems for metro rolling stock projects in India.
Titagarh will also secure the manufacturing rights and production licence for traction motors, along with the complete transfer of technology for the GoA 4 (driverless metro) TCMS software from ABB.
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With an order book of Rs 28212 Crore, Titagarh Rail Tops among pvt players with Multiple levers for future growth potential
In wagons, Titagarh has a market share of 28% in the current financial year, followed by Jupiter Wagons Ltd. and Texmaco Rail and Engineering Ltd., with 14% and 13%, respectively.
Rail Passenger coach
Apart from.Wsgons, Titagarh Rail makes passenger coaches aiming to manufacture 72 coaches per month
Tie up with ABB
In addition, recently ABB India has announced a tie-up With Titagarh Rail For Metro Projects In India.
Ramakrishna forging - Titagarh Rail consortium
In the recent past Consortium of Ramkrishna Forgings Ltd and Titagarh Rail Systems Ltd has bagged an order worth about Rs 12,227 crore from the railways ministry to supply 15.40 lakh forged wheels under the government’s Atmanirbhar Bharat initiative
Defence
Titagarh Rail recently entered in to Defence by supplying Diving Support coaches for Indian Navy.
FII’s increase their stake in Titagarh Rail.
FiI’s raised their ownership significantly in the last quarter. The cumulative holding of FIIs as of September end was 16.85% in the stock, compared to 7.05% a quarter ago
Discl: Invested at lower level. not a buy or sell recommendation. please do your own assessment before investing
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FII holding as of Dec-23: 20.25% vs. 16.85% prior quarter.
DII holding as of Dec-23: 10.45% vs. 11.57% prior quarter.
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Are the wagon manufacturers still a good buy, or have they become too expensive?
https://www.screener.in/company/compare/?codes=3435,689,3402
Disclaimer: I have off-loaded Titagarh and Texmaco recently.
Titagarh Rail Systems Limited (TRSL) has 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 Indian Navy under the Ministry of Defence’s Make in India iniƟaƟve. The keel laying ceremony for the fourth 25T Bollard Pull Tug, Yuvan (Yard 338), was also conducted after the launch.
Above image is just for representation.
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