1. At a Glance
Over the last five years, Titagarh Rail Systems has booked a 17% CAGR in sales and a 57% CAGR in profits, powered by a dominant 25–30% market share in wagons and coaches. ROCE has climbed from 9% to 17%, while promoter holding slid to 40.5%. Fair value range: ₹308–₹410.
2. Introduction with Hook
• Imagine building wagons in 2025 while half the world debates EVs. That’s Titagarh Rail’s niche: traditional heavy-steel freight and passenger rolling stock in an age of digital disruption.
• From a ₹624 Cr revenue base in FY20 to nearly ₹3,868 Cr in FY25, the company has clanged its way to growth—but at what cost to margins and balance-sheet health?
3. Business Model (WTF Do They Even Do?)
• Freight Wagons & Passenger Coaches: 25–30% domestic market share—only Indian player covering both segments.
• Metro Trains & Vande Bharat Sleeper: Partnered with BHEL on ₹24,000 Cr contract for Indian Railways.
• Steel Castings & Specialised Equipment: Back-end foundry support for marine, bridges and electromechanical subsystems.
• Export Markets: Supplying to South-East Asia, Africa and Latin America, diversifying revenue beyond India.
4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY20 | FY25 | CAGR (5Y) |
|---|---|---|---|
| Sales (₹ Cr) | 1,559 | 3,868 | 17% |
| Net Profit (₹ Cr) | 9 | 275 | 57% |
| Operating Margin | 1% | 11% | +10pp |
| ROE | 1% | 17% | +16pp |
| ROCE | 1% | 17% | +16pp |
5. Valuation – Is It Cheap, Meh, or Crack?
• Current P/E (FY25 EPS 20.52): 45.6x at ₹931 share price.
• Historical P/E range: Capital-goods peers trade at 15–20x.
• Fair Value Calculation:
- Low end: 15 × ₹20.52 = ₹308
- High end: 20 × ₹20.52 = ₹410
• Conclusion: At ₹931, the stock sits well above reasonable multiples—suggesting valuation fatigue rather than a screaming bargain.
6. What’s Cooking – News, Triggers, Drama
• Preferential Warrants: Raising ₹200 Cr at ₹945/share to promoters (EGM on Aug 8, 2025).
• Metro Orders: ₹430 Cr Pune Metro trainsets order (Jun 28, 2025).
• Vande Bharat Sleeper: Joint inauguration with BHEL, spotlight on ₹24,000 Cr contract (Apr 24, 2025).
• Associate Risk: Firema (Italy JV) under restructuring—audit qualification in FY25 results (May 30, 2025).
7. Balance Sheet – How Much Debt, How Many Dreams?
• Borrowings: Spiked from ₹166 Cr in FY24 to ₹627 Cr in FY25.
• Reserves: Grew from ₹2,191 Cr to ₹2,456 Cr, cushioning debt rise.
• Liabilities: Total up to ₹3,762 Cr vs ₹3,216 Cr (FY24).
• Fixed Assets: Jumped on capex for Metro and factory expansion—₹1,106 Cr vs ₹748 Cr in FY24.
8. Cash Flow – Sab Number Game Hai
• Operating CF: –₹97 Cr in FY25 (vs +₹86 Cr in FY24).
• Investing CF: –₹579 Cr (capex surge for rolling stock).
• Financing CF: +₹372 Cr (warrants issue, borrowings).
• Net Cash Flow: –₹304 Cr, reflecting aggressive growth capex and working-capital buildup.
9. Ratios – Sexy or Stressy?
| Ratio | FY20 | FY25 |
|---|---|---|
| Debtor Days | 81 | 63 |
| Inventory Days | 203 | 65 |
| Payable Days | 209 | 29 |
| Cash Conversion Cycle (days) | 75 | 99 |
| Working Capital Days | 131 | 106 |
• Takeaway: Improved inventory management but stretched payables reflect supplier dependency; debtor days have eased slightly.
10. P&L Breakdown – Show Me the Money
• Sales Mix FY25: Wagons/coaches ~75%, Metro & Vande Bharat ~15%, Castings & other 10%.
• Cost Structure: Steel procurement eats ~60% of sales; labor & overhead ~20%.
• Other Income: ₹75 Cr vs –₹61 Cr (FY22), cushioning PBT.
• Interest & Depreciation: Combined ~₹103 Cr, manageable given scale.
11. Peer Comparison – Who Else in the Game?
| Company | CMP (₹) | P/E | ROCE | Market Cap (₹ Cr) |
|---|---|---|---|---|
| Jupiter Wagons | 371 | 42.2 | 21.6 | 15,736 |
| Titagarh Rail | 931 | 45.6 | 17.0 | 12,533 |
• Insight: Jupiter trades at similar multiples but delivers higher ROCE; Titagarh’s margin improvement has yet to match peer efficiency.
12. Miscellaneous – Shareholding, Promoters
• Promoters: 40.46% (down from 47.26% in Jun 22).
• FIIs: 11.63%; DIIs: 13.40%; Public: 34.49%.
• KMP:
- CEO: Devendra Kumar Vyas (appointed Mar 29, 2025)
- CFO: Rakesh Mittal (reappointed Apr 7, 2025)
- Company Secretary: Nisha Gupta (resigned Apr 7, 2025)
13. EduInvesting Verdict™
Neutral tone: Titagarh Rail has engineered a steel-strong top-line and profit sprint over five years, but burgeoning debt, capex-driven cash burn and sky-high multiples leave little margin for error. The fair value band of ₹308–₹410 underscores that today’s ₹931 quoting feels like a first-class ticket on the wrong express.
✍️ Written by Prashant | 📅 July 12, 2025
Tags: Titagarh Rail Systems Ltd, 5-Year Recap, Railway Wagons, Capital Goods, Fair Value, Financial Analysis
