Titagarh Wagons reaches its highest level in 4 years; gained 26% in 2 weeks on a solid order book
Shares of Titagarh Wagons (TWL) hit a four-year high of Rs 127.60, up 3% on BSE in Tuesday’s weak market. Over the past two weeks, the stock has outperformed the market, jumping 26% thanks to a strong position in the order book. It was trading at its highest level since March 2018. In comparison, the S&P BSE Sensex was down 0.36% at 9:37 a.m.
Over the past year, the stock has risen 75%, compared to a 3.5% rise for the Sensex. It reached a record high of Rs 190 on July 1, 2017.
TWL is one of the largest private sector wagon manufacturers in India with a manufacturing capacity of 8,400 wagons per year. Over the years, the group has diversified its presence outside India by acquiring Italian metro bus manufacturer Titagarh Firema (TFA) in 2015. Credentials from TFA, Italy helped TWL secure a high-value order of Rs 1,125 crore from Pune Metro in August 2019
As in March 2002, TWL had a strong and diversified order book position of Rs 15,123 crore across Indian (Rs 10,675 crore) and Italian (Rs 4,448 crore) operations.
In the January to March quarter, the company had received orders for 24,177 wagons from Indian Railways (IR) worth around Rs 7,800 crore. The bank guarantee has been submitted and the final execution of the contract is in progress, which should be completed shortly. The company has made a small application for a change in car type that is pending IR review, it said in an investor presentation on June 7, 2022.
TWL’s long-term rating outlook remains “positive” on the expectation of an improvement in the scale of operations going forward given the current order book and continued profitability margins, which will result in improved yield ratios with a comfortable capital structure and debt coverage metrics, CARE Ratings said.
Railways are the largest consumer of wagons. The outlook for the railcar industry depends primarily on the demand for it and the budgeted allocation for such expenditure. The Indian government should focus on improving rail infrastructure and ensuring faster track development and completion, rail electrification, manufacturing of rolling stock and provision of passenger freight services. That would translate into a stable demand outlook for the company’s products and services, the ratings agency said in a report in March.
TWL’s domestic operations have improved since FY20, primarily due to the company’s ability to manage its working capital cycle. This was possible mainly due to the influx of mobilization advances coupled with the faster collection of IR dues and other inventory management techniques employed by the company.
Despite the shift in TWL’s business profile to metro manufacturing from railcar manufacturing in the medium term, the credit profile would remain robust in FY22-23, supported by its strong counterparties, India Ratings said. and Research (Ind-Ra) in a footnote. rationale of September 14, 2021.
Ind-Ra believes TWL would participate in more Metro orders in FY22 and FY23 and diversify its customer profile, which is currently dominated by Indian Railways. Ind-Ra believes this diversification would not only improve TWL’s business profile, but also provide much-needed sustainability in forecasting demand.