Texmaco Rail & Engineering Ltd "on right track", Nuvama Institutional Equities said after the private rail firm reported a 36 per cent year-on-year (YoY) jump in its June 2024 quarter (Q1 FY25) revenue. "Texmaco reported Q1 FY25 revenue of Rs 890 crore (up 36 per cent YoY/down 22 per cent QoQ (quarter-on-quarter). EBITDA margin rose 470 bps YoY/60 bps QoQ to 7.9 per cent. PAT (profit after tax) rose 176 per cent YoY (down 14 per cent QoQ). Elections/heatwaves led wagon production to fall to 1,967 (2,304 in Q4 FY24, 1,331 in Q1 FY24 and 7,000 in FY24)," the domestic brokerage stated. Management indicated that wagon production has improved during the last month, it added.
Nuvama underscored the wagon maker order book "remains healthy." "Texmaco ended Q1 FY25 with an order book of Rs 7,460 crore (Rs 7,880 crore at end of FY24). The wagon order book comprises 60 per cent of the overall order book. Private wagons contribute 12 per cent to the wagon order book. Indian Railways has already awarded 6,900 wagons YTD in FY25 while more wagon tenders are in the pipeline. While the order book of the steel foundry segment rose QoQ, it was largely flat sequentially for the other segments. The company's Bright Power division has recently emerged L1 (lowest bidder) in a Rs 240 crore order from MRVC (Mumbai Railway Vikas Corporation)," it mentioned.
"The company continues to enjoy net-cash status (cash higher than debt). Texmaco expects to complete the acquisition of Jindal Rail over the next month and shall need to pay Rs 615 crore for the same. The company shall continue to enjoy healthy leverage levels post-acquisition," the brokerage further stated.
On the stock-specific front, Texmaco Rail settled 4.20 per cent lower at Rs 245.15 on Wednesday. Nuvama has maintained its 'Buy' call on the counter with an unchanged 12-month target price of Rs 331, indicating a potential upside of 35.02 per cent. "A potential demerger of the rail EPC business can be a key re-rating trigger. Maintain 'BUY' with an unchanged target price of Rs 331 (50x Q1 FY27 EPS)," it said.
Technically, the counter traded lower than the 5-day, 10-, 20-day and 30-day simple moving averages (SMAs) but higher than the 50-day, 100-, 150-day and 200-day SMAs. The counter's 14-day relative strength index (RSI) came at 44.88. A level below 30 is defined as oversold while a value above 70 is considered overbought.
As per BSE, the company's stock has a price-to-equity (P/E) ratio of 86.90 against a price-to-book (P/B) value of 3.94. Earnings per share (EPS) stood at 2.82 with a return on equity (RoE) of 4.53.
The Kolkata-headquartered private engineering and infrastructure company is primarily engaged in the business of manufacturing railway wagons, coaches and locomotives. As of June 2024, promoters held a 48.14 per cent stake in the company.
Meanwhile, Indian equity benchmarks will remain closed on Thursday (August 15) to mark Independence Day. The domestic bourses will reopen on August 16, 2024 (Friday).