TEXRAIL - Texmaco Rail & Engineering Limited Share Price

During the earnings conference call on May 17, 2025, management provided a positive outlook for Texmaco Rail & Engineering Limited. Key highlights include:

1. Financial Performance: For FY2025, consolidated revenue reached Rs.5,107 crore, showing a growth of 45.8% year-on-year. EBITDA was Rs.525 crore with a 10.3% margin, up from 9.5% last year. Profit Before Tax (PBT) grew 112.5% to Rs.345 crore, resulting in a margin of 6.7%. The Return on Equity (RoE) improved to 8.4% from 4.9%, while Return on Capital Employed (RoCE) increased to 16.2% from 13.6%.

2. Freight Cars Production: The company delivered 10,612 Freight Cars during the year, a 51% increase from 7,028 cars last year. This growth solidifies Texmaco's leading position in India's wagon manufacturing market.

3. Strategic Partnerships: Management highlighted two significant global partnerships that aim to enhance Texmaco's market presence. The first is with Nevomo, focused on high-speed rail and predictive diagnostics, and the second with Trinity Rail, which centers on expanding opportunities in North American markets.

4. Global Capability Center (GCC): A new GCC is being established in Faridabad to enhance services for both private sector clients and Indian Railways, aiming to broaden Texmaco's service offerings and strengthen its international footprint.

5. Market Conditions: The Indian government has maintained a capital outlay for railways at Rs.2.5 lakh crore, supporting continued infrastructure investment. Management forecasts demand for 1.5 lakh wagons due to a government directive to increase rail's logistics share from 27% to 45% by 2030.

6. Expectations for FY26: Looking forward, management expressed confidence in maintaining momentum and anticipates a significant growth trajectory in both production and revenue, potentially reaching a CAGR of 35% to 40% in the Freight Car Division.

These insights illustrate Texmaco's commitment to growth through operational efficiencies, strategic partnerships, and strong market positioning moving forward into FY26.

Questions and Answers from the Q&A Session of Texmaco Rail & Engineering Conference Call on May 17, 2025

1. Question: "Why is there a decline in wagon production? Has there been any problems with wheel supply?"

Answer: "We don't believe wagon production should be evaluated quarterly as it follows long lead times based on project design. Our share of private wagon rakes has increased, and while supply chains may vary, production fluctuations are not unusual. Evaluating our performance based on short periods can be misleading."

2. Question: "Is there a possibility that we can beat FY '25 production numbers going forward in FY '26?"

Answer: "Yes, we aim to maintain our growth momentum. We're committed to significant increases across all business segments, and I assure you there will be a strong drive for production growth next year."

3. Question: "What will production look like for next year given that we are now having a higher share for private wagons?"

Answer: "We strive to continue this upward trajectory. We're confident about a higher share of orders from private sectors in FY '26 and are actively working towards exceeding previous production levels."

4. Question: "How do you see orders inflow for FY '26, given the lack of large tenders?"

Answer: "We are optimistic about order inflows. The government's execution of infrastructure plans gives us confidence that tenders will come. There's significant demand for wagons, driven by GDP growth and infrastructure investment, which supports our optimistic forecast."

5. Question: "Can you tell me about the expected timeline for commercialization of partnerships with Trinity Rail and Nevomo?"

Answer: "The Global Capability Center will focus on rail innovations. Commercialization is anticipated to begin this financial year, with both partnerships aimed at enhancing Texmaco's reach in the global market."

6. Question: "What is the significance of the increase in Property, Plant, and Equipment (PPE) by Rs. 450 crores?"

Answer: "The increase is primarily due to the acquisition of Texmaco West this year, which wasn't included in previous figures. This acquisition significantly contributes to our overall asset base."

7. Question: "Why are we struggling with margins despite an increase in private sector orders?"

Answer: "Quarterly figures may present anomalies due to adjustments and provisions. While we face challenges, our margins have improved over the year, with a full-year margin of 10.3% and a focus on operational enhancements."

8. Question: "What was the quantum of one-time expenses in Q4 for the Freight Car division?"

Answer: "We had one-off expenses totaling Rs. 20-25 crores primarily related to provisions for slow-moving accounts. This impacted our profitability for the quarter but was a necessary precaution."

9. Question: "What is the outlook for the CAPEX for FY "˜26?"

Answer: "We've planned our CAPEX to align with improving our infrastructure. Our approach will remain similar to FY '25, focusing on enhancing our operational capabilities."

10. Question: "What are the projected revenues for Jindal Rail for FY '25?"

Answer: "Jindal Rail achieved a revenue of more than Rs. 900 crores with a PBT exceeding Rs. 125 crores. We see potential for further growth and maximization."

These answers provide a snapshot of Texmaco's strategies, challenges, and future plans as discussed in the earnings call.