Shares of Titagarh Wagons have given skyrocketing returns in the last few years, rising over 1000 percent in just 3 years. From its COVID-low of ₹20.45, hit in March 2020, the stock has surged 1372 percent.
It has also given multi-bagger returns in the last 1 year, up 187 percent in this period. Meanwhile, in 2023 YTD, the scrip jumped 35 percent, giving positive returns in 3 of the 4 months so far. It has rallied 15 percent in April so far after a 26 percent rise in March. However, it fell around 9 percent in February. In January, the stock was up 2 percent.
The company is engaged in rail rolling stock, defense, shipbuilding, heavy engineering and infrastructure. It is engaged in the manufacturing and selling of railway wagons, steel castings, heavy earthmoving and mining equipment, bailey, and others. The company operates in three segments: Freight rolling stock, passenger rolling stock and shipbuilding, bridges & defence.
Recently, Bharat Heavy Electricals Ltd (BHEL) and Titagarh Wagons jointly won a new order from the Ministry of Railways to supply 80 Vande Bharat trains. Each train will cost ₹120 crore, amounting to a total order size of ₹9600 crore. The order is to be completed in 72 months. BHEL is the lead member of the consortium.
Meanwhile, in the December quarter, the company's net profit rallied 2114 percent to ₹32.55 crore as against ₹1.47 crore in the year-ago period. Its sales also rose 58.80 percent to ₹766.40 crore in Q3FY23 versus ₹482.63 crore in Q3FY22.
Overall in FY23, the company posted a loss of ₹33 lakh versus a loss of ₹15 crore in FY22. However, its revenue advanced 26.97 percent to ₹1,930.97 crore in FY23 as against ₹1,520.64 crore in FY22.
What should you do with the stock now?
Brokerage house B&K Securities recently initiated coverage on the stock with a 'buy' call and a target price of ₹404, indicating an upside of almost 40 percent.
“Titagarh Wagons is one of the key leading manufacturers of rolling stock in India. Macro tailwinds in terms of the shift of government’s focus to rolling stock procurement (Freight and Passenger) and public transport creation (Metro/High-speed rail), along with strong capabilities and available capacities should help the firm emerge as the biggest beneficiary in the railway value chain. Focus on diversification through passenger rolling stock, Vande Bharat trains, Wheel Set Joint Venture (JV) should help reduce the dependence of wagon segment, open new markets and drive growth,” explained the brokerage.
B&K expects sales and earnings CAGR of 41 percent and 45 percent, respectively, for the firm over FY22-25E along with an improved RoE profile (17.3 percent in FY25E from 9.5 percent in FY20). The slowdown in government ordering and an increase in competitive intensity remains a key risk, it added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.