Titagarh Wagons - Riding On Railway Capex: ICICI Securities

ICICI Securities Report

We visited Titagarh Wagon Ltd.’s wagon and coach manufacturing facilities in Kolkata. Key takeaways from the visit are:

1. favorable demand environment supported by the government’s increased budgetary allocation for the railways;

2. plans to expand annual wagon manufacturing capacity from 8,400 units to 12,000 (1,000 per month); this will help it complete its existing order of 24,177 wagons and future orders from Indian Railways;

3. coach manufacturing capacity expansion from 250 coaches to 850 per annum to strengthen its presence in the passenger rolling stock (Vande Bharat / metro opportunities); and,

4. joint venture entered into with Ramkrishna Forgings Ltd. to manufacture forged wheels for Indian Railways.

The current orderbook stands at Rs 150 billion (including Vande Bharat trainset order of around Rs 50 billion). The stock has witnessed a strong run-up (three times) in the recent past on the back of robust order inflows. It is currently trading at 44 times trailing twelve months FY23E.

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