Titagarh Rail shares: Nuvama maintains 'Buy' despite subdued Q4 earnings; here's why

Titagarh Rail Systems (TRS) posted a subdued set of numbers for the January-March 2025 quarter (Q4 FY25), with revenue and profit falling year-on-year (YoY), as wheelset availability issues continued to hamper wagon production. Nuvama Institutional Equities said TRS's revenue declined 5 per cent YoY to Rs 10,000 crore in Q4 FY25, while profit after tax (PAT) slipped 6 per cent YoY. EBITDA margin also contracted by 70 basis points (bps) YoY to 10.7 per cent. Despite these challenges, the domestic brokerage noted that QoQ performance showed improvement, with revenue rising 11 per cent and PAT climbing 13 per cent, sequentially.

The company's wagon production stood at 2,455 units in the quarter, up from 2,233 in Q3, but still below earlier highs due to the shortage of wheelsets supplied by Indian Railways. In FY25, TRS produced a total of 9,431 wagons. Coach deliveries were limited to six units in Q4, bringing the annual total to 12, significantly down from 42 coaches delivered in FY24.

TRS also delivered 176 traction motors and converters in the quarter, taking the FY25 tally to 636 — marking a substantial rise from just 84 units in the previous year.

The company's total order book at the end of FY25 stood at Rs 24,500 crore, down marginally from Rs 25,300 crore in Q3. Of this, around Rs 11,200 crore worth of orders are scheduled for execution over the next three to five years. Nuvama flagged muted order inflows and subdued tendering activity, leading to a drop in the short-term executable order book.

Nuvama still maintained its 'Buy' rating on the stock and raised its target price to Rs 1,292 (up from Rs 1,197 earlier), citing a roll-forward in valuation to Q4 FY27 earnings. The brokerage has, however, trimmed its EPS estimates for FY26 and FY27 by 8 per cent and 3 per cent, respectively.

It highlighted that TRS emerged as the lowest bidder for the Mumbai Metro Line 6 project, involving the supply of 108 coaches — signalling future growth opportunities in the urban transport segment.

"While supply chain constraints and a weak tendering environment weigh on near-term performance, execution has improved and long-term fundamentals remain intact," Nuvama stated.

Shares of Titagarh Rail have been volatile in recent weeks and the stock settled 1.05 per cent lower at Rs 898.40 on Tuesday.