Titagarh Rail Stock Price Jumps 5% After Morgan Stanley Foresees 24% Upside


by Sandip Das on 7 May 2024,  3 min read


Morgan Stanley, a global research firm, recently commenced coverage of Titagarh Rail Systems, offering an optimistic outlook by assigning it an overweight rating. The firm’s analysis indicates that Titagarh Rail Systems stands to benefit significantly from the resurgence of the Indian railways sector.

In their report, Morgan Stanley provided a target price of Rs 1,285 per share for Titagarh Rail Systems, suggesting a potential upside of approximately 24 percent from the current level. This valuation is based on a forward price-to-earnings (PE) multiple of 35 times FY26 earnings, a metric deemed fair by Morgan Stanley considering the company’s robust earnings visibility and improving return ratios, according to a moneycontrol report.

Morgan Stanley’s analysis emphasises Titagarh’s strength in the freight segment, which is viewed as a reliable source of cash flow for the company. Additionally, the firm identifies the passenger business as a promising avenue for growth, positioning it as a new engine for Titagarh’s expansion. The brokerage firm forecasts a robust 28 percent earnings compound annual growth rate (CAGR) from FY24 to FY27, underscoring its bullish stance on the company’s prospects.

Titagarh Rail Systems anticipates executing approximately 1,000 freight wagons per month from FY25 to FY27. Moreover, in the passenger coach segment, the company plans to deliver 26, 76, and 96 coaches per quarter in FY25, FY26, and FY27, respectively, according to Morgan Stanley’s projections.

Also read: Top Stocks to Buy For Up To 14% Upside

Titagarh Rail Systems on February 19, 2024 secured an order worth Rs 170 crore from the Defence Ministry of India. The order entails the procurement of 250 specialised wagons, with the contract execution scheduled to commence 12 months after signing and conclude within 36 months, as stated in the company’s press release.

Titagarh Rail Systems has demonstrated impressive performance in the financial markets, with its shares witnessing a commendable 32 percent appreciation over the past year. In comparison, the Nifty 50 index, a benchmark for the Indian stock market, recorded a 23 percent increase during the same period.

Morgan Stanley’s favorable assessment and target price for Titagarh Rail Systems underscore the company’s promising position within the Indian railways sector. With a strong focus on both freight and passenger segments, coupled with its export potential and recent contract wins, Titagarh Rail Systems appears poised for continued growth and value creation for its stakeholders in the foreseeable future.

Source: moneycontrol

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Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment

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