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.

Titagarh Rail Systems Limited , a leading rail systems manufacturer, has reported a profit for the first quarter and announced strategic moves to streamline its business operations.

Q1 Financial Performance

For the quarter ended June 30, Titagarh Rail Systems reported:

• Revenue from operations of Rs. 679.30 crore
• Profit after tax of Rs. 42.75 crore
• Earnings per share (EPS) of Rs. 3.17

The company's performance was impacted by a shortage of wheelsets, which affected production in its Freight Rail Systems segment. Despite this challenge, Titagarh maintained its leadership position in wagon deliveries to Indian Railways.

Segment-wise Performance

The Freight Rail Systems segment delivered 1,628 wagons during the quarter, down from 2,455 wagons in the previous quarter due to supply constraints. However, the company expects to recover the production loss in the coming quarters.

Strategic Developments

Titagarh Rail Systems has taken several strategic steps to focus on its core business and unlock value in other segments:

1. Naval Systems Subsidiary: The company has established Titagarh Naval Systems Private Limited (TNSPL) as a wholly-owned subsidiary by acquiring its entire share capital for Rs. 10,000.

2. Shipbuilding Business Transfer: The Board has approved in principle the transfer of its Shipbuilding and Maritime Systems (SMS) business to TNSPL. This move aims to create a dedicated structure for the SMS business and potentially attract strategic investors.

3. Defence and Bridges Business: A committee has been formed to evaluate growth strategies for the Defence and Bridges business, including potential strategic partnerships.

4. Convertible Warrants: The company has approved the issuance of 21,11,932 convertible warrants at Rs. 947 each to promoter group members, totaling Rs. 199.99 crore.

Order Book and Future Outlook

Titagarh Rail Systems secured new orders worth Rs. 2,469 crore during the quarter, bringing its total order book to approximately Rs. 26,000 crore. Notable new orders include:

• 108 metro coaches for Mumbai Metro Line 6
• 36 additional metro coaches for Pune Metro

The company is targeting production of about 120 metro coaches in the current fiscal year, a significant increase from 12 coaches in the previous fiscal year.

Challenges and Uncertainties

Titagarh faces uncertainty regarding its investments in its Italian associate, Titagarh Firema SpA, which has filed for protection under the Italian Crisis Code due to financial difficulties. The company is actively working with Italian authorities to find a resolution, including the possibility of inducting new equity investors.

Titagarh Rail Systems' Managing Director, Mr. Umesh Chowdhary, commented on the results, stating that while Q1 performance was impacted by wheelset shortages, the company expects to return to normal production in Q2. He emphasized that the Passenger Rail Systems business is at a take-off point and will be a significant growth driver in the coming quarters.

The company's 28th Annual General Meeting is scheduled for September 15.