TITAGARH - TITAGARH RAIL SYSTEMS LIMITED Share Price

Management's outlook for FY26 is optimistic, emphasizing it as a transformative year for Titagarh Rail Systems Limited, especially in the passenger rail segment. The company targets a production run rate of 1,000 wagons monthly and aims to reach up to 1,200 wagons per month given adequate market demand and completion of their foundry expansion.

Key forward-looking points from management include:

1. Wagon Production: During FY25, the company achieved record production of 9,431 wagons, the highest ever in India. The target is to ramp up monthly output to 1,200 wagons by FY26, contingent on normalized supply of wheelsets, which are expected to resume production from June 2025.

2. Financial Performance: The freight rail segment is projected to generate revenues of around INR 4,000-4,500 crores annually, assuming full capacity of 12,000 wagons a year.

3. Passenger Rail Systems (PRS): The passenger segment, including products like Vande Bharat and metro coaches, is expected to generate significant revenue growth; sales for metro coaches alone could yield around INR 8,500 crores from 850 cars at INR 10 crores each.

4. Traction Motors: The company produced 636 traction motors in FY25 and aims to ramp production to between 1,500-1,800 motors per month in FY26, with an expected revenue of INR 300-400 crores from this segment.

5. Foundry Production Capacity: Aiming for yearly production of around 40,000 tons of castings, the company expects substantial enhancements post the foundry expansion in FY26.

6. New Ventures: Expansion into the Safety and Signaling Systems and Shipbuilding and Maritime Systems are identified as key growth areas, with investments being directed to solidify capabilities in these sectors.

Management expresses readiness to meet increased demand amidst government focus on infrastructure improvements, positioning Titagarh for a robust growth trajectory in the coming years.

Here are the major questions and their respective detailed answers as requested:

Question 1: "Who are our global JV partner in signaling systems? What are the timelines for products and approval? What kind of revenue visibility can we expect over 3 to 5 years?"

Answer 1: We are in discussions with various partners for our signaling systems business, including MERMEC from Italy. This new business unit will take time to establish. We are currently waiting for results from the tender we participated in. As for revenue visibility, I cannot provide specific numbers until we finalize partnerships and secure contracts.

Question 2: "What are the steps to tap the traction motor opportunity, which is mentioned to be around INR 2,000 crores?"

Answer 2: I don't have the precise revenue figure you mentioned. However, we expect to ramp up production from about 50 traction motors to between 125 and 150 per month this year. Additionally, we have an order book of approximately INR 400 crores once the EMU and MEMU propulsion systems are approved, indicating strong business potential in the next couple of years.

Question 3: "When can we expect normalcy in wheelset production after the shortage?"

Answer 3: I mentioned earlier that we expect production to normalize starting in June 2025. Therefore, we anticipate that the wheelset supply issues will be resolved from this month onward, leading to an improvement in wagon production.

Question 4: "What's the outlook on private sector wagon ordering post-moratorium?"

Answer 4: The private sector's wagon orders have been impacted due to a moratorium, but there's considerable appetite for wagon investment. We believe this ban will lift soon, and once that happens, private sector orders should significantly pick up, alongside continued dependence on Indian Railways for 80% of our wagon orders.

Question 5: "Can you clarify the expected revenues from the Propulsion business over the medium to long term?"

Answer 5: We anticipate generating around INR 300 to 400 crores from about 2,000 traction motors a year and up to INR 1,000 crores from EMU/MEMU systems within 2 to 3 years. This positions us well for substantial revenue growth in the Propulsion segment as we build our capabilities.

Question 6: "What is the expected timeline to manufacture one metro car?"

Answer 6: Once we reach full production maturity, the cycle from cutting metal sheets to a completed metro car is about 60 to 90 days. We aim to ramp up to produce 20 to 25 cars per month by the end of the current financial year, contingent upon order demand.

Question 7: "How does the management view the revenue outlook for FY '26, especially for FRS and Metro deliveries?"

Answer 7: We expect significant improvement in FY '26. With wheelset production normalizing from June, we anticipate achieving our production targets, and consequently, revenues, for both the FRS and Metro segments should see substantial growth over the coming quarters.

Question 8: "You mentioned an order book of around INR 11,000 crores. What are the execution timelines for those?"

Answer 8: Freight wagon orders typically have about a one-year execution timeline, while passenger segment orders, especially for Vande Bharat, have longer timelines. Each order's execution varies significantly based on project specifics. Overall, we are well-positioned to meet these timelines.

These responses summarize the Q&A section and the answers provided by Umesh Chowdhary, ensuring all relevant numbers and forward guidance are included.