Titagarh Rail shares hit 52-week low, investors lose Rs 4,200 cr in February; can they recover?

Shares of Titagarh Rail Systems have tumbled 31% in February, nearing the Rs 700 mark today from the Rs 1,000 mark at the end of January this year. The correction has wiped out Rs 4,215 crore worth market cap of the railway firm this month. Titagarh Rail stock slipped 5% to a fresh 52-week low of Rs 703.55 on Friday. Titagarh Rail Systems market cap fell to Rs 9,481 crore.

Total 0.59 lakh shares of the firm changed hands amounting to a turnover of Rs 4.22 crore. However, Titagarh Rail stock has risen 238.74% in two years, 719% in three years and zoomed 1,642% in five years. 

The stock hit its 52-week high of Rs 1896.50 on June 27, 2024. 

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 26.5, signaling it's trading in the oversold zone. 

Jigar S Patel from Anand Rathi said, "Support will be at Rs 680  and resistance will be Rs 735. A decisive move above the Rs 735 level may trigger a further upside of Rs 780. The expected trading range will be between Rs 670 and Rs 780 in the short-term."

Global brokerage Morgan Stanley has maintained its 'overweight' rating and trimmed target price to Rs 1,090 apiece from Rs 1,300. 

The brokerage said near-term execution challenges are likely to affect the revenue trajectory. 

The company is a beneficiary of robust rail capital expenditure, Morgan Stanley said adding that ordering so far remains subdued. 

Inadequate wheels sets from Indian Railways constrained Q3 offtake and passenger execution in Vande Bharat was delayed by 9 months by a change in car design plan, said the brokerage.

Passenger segment has won no orders since October 2023 and execution in Ahmedabad metro will now begin in Q1FY26 instead of Q4FY25 previously). The brokerage lowered its FY25/FY26 earnings estimates by 14%/7%. 

A R Ramachandran, SEBI registered Independent analyst says, "Titagarh Rail stock price is bearish but oversold on the Daily charts with next support at Rs 681. A daily close above resistance of Rs 728 could lead to a target of Rs 812 in the near term."
 

Brokerage Nuvama too has reduced its price target to Rs 1,197 from the earlier Rs 1,870. 

"Deferral of execution timelines for wagons, Vande Bharat and existing metro rail orders, subdued tendering (both in wagons and passenger coach segment) along with a nil hike in outlay for railways in the budget compel us to slash FY25E/26E/27E EPS by 10%/12%/13% and P/E multiple to 35x from 52x. Maintain ‘BUY’ with a revised TP of INR 1,197 (earlier INR1,870) as we roll forward valuation to Q3FY27," said Nuvama. 

Titagarh Rail clocked a 16% year-on-year (YoY) delcine in net profit at Rs 62.8 crore for the third quarter against a net profit of Rs 74.8 crore in Q3 of the previous fiscal. Revenue from operations fell 5.5% to Rs 902.2 crore in Q3 against Rs 954.7 crore in the corresponding period of the preceding fiscal.

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.