Titagarh Rail Systems Limited , a leading player in the Indian rail manufacturing sector, has reported a significant decline in its financial performance for the first quarter, yet its shares gained over 4% following the release of results.

Financial Highlights

• Consolidated net profit declined 54% to Rs 30.86 crore, down from Rs 67.01 crore in the same period last year.
• Revenue decreased to Rs 679.00 crore from Rs 903.00 crore in the previous year, marking a 24.8% decline year-over-year.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell to Rs 72.55 crore compared to Rs 102.00 crore in the prior year.
• The company's EBITDA margin slightly declined to 11.08% from 11.28% in the corresponding quarter.

Operational Performance

The company's performance was significantly impacted by supply chain issues, particularly in its Freight Rail Systems segment:

• Wagon dispatches stood at 1,628 units, a sharp decline from 2,073 wagons in the corresponding quarter last year.
• The decrease in wagon production was attributed to extremely poor supplies of wheelsets from Rail Wheel Factory, Bangalore.
• Despite the setback, the company maintained its leadership position in wagon deliveries to the Indian Railway system.

Order Book and New Contracts

Despite the challenging quarter, Titagarh Rail Systems secured several new orders:

• New orders worth Rs 2,092.00 crore were booked during the period.
• The overall order book now stands at approximately Rs 26,000.00 crore, including its share in joint ventures.

Market Performance

• Shares traded at Rs 808.00, up 4.10%, outperforming the NSE Nifty 50's 0.17% gain.
• The stock has declined 43.53% over the past 12 months and 26.07% year-to-date.
• Seven out of eight analysts maintain a 'buy' rating with one 'hold' recommendation, with price targets suggesting a 41.5% potential upside.

Future Outlook

The company remains optimistic about its future performance:

• Titagarh Rail Systems expects to recover the loss of production in the balance quarters.
• The company aims to align its wagon deliveries with the previous fiscal year's performance.

Umesh Chowdhary, Vice Chairman and Managing Director, commented that the drop in production during the quarter was only a temporary setback. He expressed confidence in returning to normal production within the next quarter, driven by improved wheelset supplies from Indian Railways.

As Titagarh Rail Systems navigates through these challenges, the company's strong order book and market confidence position it for potential growth in the coming quarters, particularly in its rail systems business.

Titagarh Rail Systems Limited , a leading player in the Indian rail manufacturing sector, has reported its financial results for the first quarter, highlighting both challenges and significant new order acquisitions.

Wagon Production and Delivery

The company delivered 1,628 wagons in Q1, a decrease from 2,455 wagons in the previous quarter. This reduction was primarily attributed to poor wheelset supplies from Rail Wheel Factory, Bangalore. However, the company stated that the supply situation has since normalized and they remain confident of recovering the production loss in the coming quarters.

New Orders and Order Book

Despite production challenges, Titagarh Rail Systems secured new orders worth INR 2,469.00 crores (including GST) during the quarter. This has bolstered the company's total order book to approximately INR 26,000.00 crores, excluding GST.

Key Developments

The company reported several significant developments during the quarter:

1. Convertible Warrants Issue: Approval was obtained for issuing 21,11,932 convertible warrants to promoter group entities, totaling INR 199.99 crores.

2. Land Acquisition: Titagarh entered a 99-year lease for 40.009 acres of land adjacent to its Uttarpara factory for INR 137.00 crores, providing crucial space for enhanced production infrastructure.

3. Metro Coach Orders: The company received substantial orders for metro coaches, including:

   • 108 coaches for MMRDA Line 6 worth INR 1,599.00 crores
   • 36 additional coaches for Pune Metro valued at INR 431.00 crores

4. Bangalore Metro Milestone: Titagarh's first train for Bangalore metro was inaugurated by the Prime Minister, marking the company's entry into stainless-steel body metro coach production.

Financial Performance

The Freight Rail Segment achieved an EBIT margin of 11.16% compared to 12.12% in the previous fiscal year. The company expects to maintain EBIT margins similar to the previous year's levels.

Strategic Moves

Titagarh Rail Systems is planning to transfer its shipbuilding business to a wholly-owned subsidiary, Titagarh Naval Systems Private Limited. This move aims to focus on core railway operations while allowing independent development of other businesses.

Outlook

Despite the Q1 setback, management remains optimistic about matching the previous fiscal year's delivery of 9,431 wagons in the current fiscal year. The company also targets a production of approximately 120 metro coaches in the current fiscal year, a significant increase from 12 coaches in the previous year.

Umesh Chowdhary, Vice Chairman and Managing Director, commented on the results: "The drop in production during the quarter is only a blip, and the company has already started recovering due to improved wheelset supplies in the past weeks. We will be able to return to normal production within Q2."

Chowdhary added, "The real growth driver for the Company over the next quarters and years will come from the Passenger Rail Systems business, which is very much at the take-off point now."

As Titagarh Rail Systems navigates through supply chain challenges and capitalizes on new opportunities in the passenger rail segment, the company appears poised for growth in the coming quarters.