The rally in Titagarh Rail Systems has fizzled out since June end this year. The multibagger stock rose to a record high of Rs 1896.50 on June 27, 2024. Since then, it has lost over 36% from that level. In the last three months alone, the stock is down 25.81%. Before the correction, the multibagger stock had seen a stellar rally, leaving investors worried about high valuations of the railway stock.
The one-year return from the Titagarh stock, which stood at over 260% on June 27 this year has shrinked to 59% in the current session. On similar lines, the stock which had zoomed over 75% on a year-to-date basis on June 27 is showing a marginal rise of 9.89% in the current session for the same period.
Titagarh Rail shares climbed 4% to Rs 1237 on Thursday. The rally in the stock came even as the benchmark indices were under selling pressure.
Market cap of the firm rose to Rs 16457 crore. Total 1.01 lakh shares of the firm changed hands amounting to a turnover of Rs 12.31 crore. Titagarh Rail stock has clocked multibagger returns of 1,182.76% in three years and zoomed 2785.44% in five years.
The stock touched its 52-week low of Rs 752.85 on November 2, 2023.
Titagarh Rail stock has a one-year beta of 1.5, indicating very high volatility during the period.
In terms of technicals, the relative strength index (RSI) of the stock stands at 50.4, signaling it's trading neither in overbought nor in the oversold zone.
SBI Securities has chosen Titagarh Rail as its Diwali pick. It has assigned a price target of Rs 1510 to the stock.
“At the current price, the stock is trading at FY25E/FY26E P/E multiple of 43.7x/31.6x of its Bloomberg consensus earnings estimate. The company is well positioned to leverage on healthy growth prospects backed by (a) Growing demand, (b) Attractive rail value chain opportunities, (c) Higher Infrastructure spend and (d) Policy support,” said SBI Securities.
“Key Risks to the potential growth are any slowdown in railway capex; high dependence on Indian Railways; Higher competitive intensity etc,” added the brokerage.
Systematix has assigned a price target of Rs 1238 on the Titagarh Rail stock.
"We cut our EBITDA estimates by 16%/22.5%/22.6% for FY25E/FY26E/FY27E and now we forecast 25.1%/17.6%/21.8% CAGR for revenue/EBITDA/PAT during FY24-FY27E. We, therefore, cut our target price to Rs 1,238. Absence of new big order, risk of margin contraction due to higher contribution of low-margin PRS and delayed execution are few concern. We maintain a HOLD rating on the stock," said the brokerage.
Brokerage Nuvama is bullish on the stock post Q2 earnings and maintained its buy call with a revised price target of Rs 1870. "Renegotiation in contract terms for Vande Bharat (Link) and other issues for Bengaluru metro order lead us to defer execution timelines and revise FY25E/26E/27E EPS by 4%/12%/10% downwards. Maintain ‘BUY’ with a revised target price of Rs 1,870 (earlier Rs 1,988) as we roll forward valuations to Q2FY27 (52x P/E). We remain bullish on the firm given surging railway capex," said Nuvama.
In the September 2024 quarter, Titagarh Rail Systems reported a 14 percent year-on-year rise in net profit to Rs 81 crore against Rs 71 crore in the same period last year. Revenue climbed 13% to Rs 1057 crore in Q2 from Rs 935 crore in the corresponding quarter of the previous fiscal year.
Total expenses rose to Rs 953 crore in Q2 against Rs 821 crore posted by its in Q1FY25 and Rs 847 crore in the year ago period.
Titagarh Rail Systems is engaged in the manufacturing and selling of freight wagons, passenger coaches, metro trains, train electricals, steel castings, specialised equipment and bridges, and ships. The company operates through three segments: freight rolling stock, passenger rolling stock, and shipbuilding, bridges & defence.