Multibagger railway stock zooms 9% on robust Q4 results; target price at ₹1,285 per share

Shares of Titagargh Rail Systems Ltd. were trading with gains of 9% on Thursday, May 16. The stock hit a day's high of ₹1,217 apiece on the NSE after the company reported a 64% year-on-year rise in net profit at ₹79 crore for the March 2024 quarter.

Its revenue rose 8% to ₹1,052 crore in the quarter, compared to ₹974 crore in the corresponding period of the preceding fiscal.

multibagger railway stock zooms 9% on robust q4 results; target price at ₹1,285 per share

Earnings before interest, taxes, depreciation, and amortisation or EBITDA margin improved to 11.4% from 9.8% last year.

Global brokerage firm Morgan Stanley has an 'Overweight' rating on the stock, with a target price of ₹1,285 per share. This suggests a potential upside of 15% from the stock's closing levels on Wednesday.

The foreign brokerage said Titagarh's growth in freight segment revenues was steady while passenger segment was affected by Pune contract nearing completion.

Its net working capital rose 15 days year-on-year.

Speaking to CNBC-TV18, Umesh Chowdhary, VC and MD of Titagarh Rail Systems said for freight operations, they previously aimed for a 10% margin. However, due to operational efficiencies, he now believes a margin of 11.50-12% is reasonable.

The Titagarh Rail Systems MD said once the company reaches a base level of 15 to 20 coaches, achievable by the fourth quarter this year, the EBITDA margin can improve to 10%.

"The real potential of the passenger business will be seen in FY26-27. So, in FY26 we will have a substantial jump and FY27 there will be a further substantial jump of order execution that we have on hand," Chowdhary said.

Chowdhary further said that plans for integration with propulsion by FY26 will further improve overall EBITDA margins to 13-15%.

The Titagarh Rail stock has clocked multibagger returns of 150% in a year and is up 15% in 2024 so far. At 1:05 pm, the scrip was up 8.28% at ₹1,204.70 apiece on the NSE.

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