This Railway Stock is Supercharged for Growth after Entering Shipbuilding Biz

Imagine ignoring India's top shipbuilding company Mazagon Dock Shipbuilders in its early days...

And then watching it soar thousands of percent while sitting on the sidelines.

That's what happened with millions of investors.

While investors are chasing artificial intelligence (AI), electric vehicles (EVs), and cryptos, the massive underlying opportunity in India's shipbuilding and maritime ecosystem can't be ignored.

Right now, the shipbuilding space is largely dominated by the top three players - Mazagon Dock, Garden Reach, and Cochin Shipyard.

But that's about to change soon as a new player with deep pockets has entered the space.

The company is none other than investor favourite Titagarh Rail Systems.

About Titagarh Rail Systems

Titagarh Rail Systems, formerly Titagarh Wagons, is mainly engaged in manufacturing and selling freight wagons, passenger coaches, metro trains, train electricals, steel castings, and specialised equipment.

In recent years, it has been breaking new grounds by becoming the first private sector company to manufacture Vande Bharat trains, demonstrating the growing role of private players in India's railway sector.

A month ago, the company announced a management reorganisation as well as its plans to venture into new high growth areas.

Titagarh's Shipbuilding & Maritime Foray

In February 2025, Titagarh Rail Systems informed the exchanges about the formation of new verticals under the names Ship Building and Maritime Systems (SMS), and Safety and Signaling Systems (SSS).

To be sure, Titagarh was already present in the shipbuilding and maritime businesses. In the past, it has designed and manufactured several projects including specialized ships, a passenger ferry, coastal research vessels, and other vessels for the Indian Navy.

With this recent announcement, the company has made it clear that it wants to capture a pie of the growing shipbuilding market.

The company's MD Umesh Chowdhary recently said that they see shipbuilding and maritime systems as a key growth driver in the next few years.

With previous experience in delivering vessels, Titagarh is now planning to scale up its presence in this sector by setting up new shipyards on both the eastern and western coasts of India.

In the past, Titagarh had put its shipbuilding investments on hold to focus on passenger rail systems.

With a dominant hold in the rail segment, the company now sees an opportunity to develop the maritime business as its next growth engine.

Currently, Titagarh has an order book of Rs 3 billion (bn) in the shipbuilding segment for building around 10-11 vessels for the Indian Navy.

These are smaller vessels though and Titagarh is eyeing large orders in the coming months with its planned expansion and take on larger shipbuilding projects.

Decent Growth Levers in Place...

After a lull period that impacted most railway stocks, the sentiment is starting to turn bullish. Titagarh has multiple tenders in the pipeline for the passenger rail segment.

The 28-year-old company is also developing driverless metro trains in a tie-up with ABB India, the Indian arm of Swiss-Swedish power and automation group ABB.

Titagarh looks well-positioned for continued growth across its business segments.

However, it's important to note that the success of these ambitious plans hinges on factors like consistent government spending and the company's ability to execute its expansion effectively.

Latest Quarterly Earnings Performance

For the most recent December 2024 quarter, Titagarh posted a 16% decline in its net profit at Rs 628 million (m).

The company's revenue during the quarter fell 6% YoY to Rs 9 bn.

This weak performance is attributed to operational challenges wherein the execution was impacted due to delays in wheelset supplies from the railways.

Coming to its long term financials, in the past five years, the company's net sales and net profit have grown at a CAGR of 20% and 41%, respectively.

Financial Snapshot

Rs m, consolidated	FY20	FY21	FY22	FY23	FY24
Net Sales	17,663	15,206	14,675	27,796	38,533
Growth (%)	-	-14%	-3%	89%	39%
Operating Profit	1,550	1,055	1,826	3,061	4,917
OPM (%)	9%	7%	12%	11%	13%
Net Profit	-342	-150	-3	1,302	2,861
Net Margin (%)	-2%	-1%	0%	5%	7%
ROE (%)	7.4	-2.3	9.3	14.9	18.1
ROCE (%)	7.8	4.8	9.7	18.6	26.4
Dividend (Rs)	0.0	0.0	0.0	0.5	0.8
Debt to Equity (x)	1.0	1.0	1.0	0.3	0.0

Source: Equitymaster

To resolve the delays of wheelset from Indian railways, the government has awarded a contract for a new wheel plant, being developed jointly by Titagarh Rail and Ramakrishna Forgings.

The plant is expected to commence production by 2026.

As far as its Vande Bharat and Metro projects are concerned, Titagarh has started the Vande Bharat project execution.

The company is expecting delivery of the first Vande Bharat train by March 2026.

As part of the planned expansion, Titagarh is targeting production capacity of 1,000 wagons per month, with current production at approximately 800-900 wagons. This will ramp up its production to 3,000 wagons per quarter.

In FY24, a high manufacturing capacity helped the company secure orders worth Rs 280 bn. With the company investing heavily in capex, more high-value orders are expected to pour in, taking the order book upwards.

Some of these high value orders would be for wagons from Indian Railways, Vande Barat, Surat Metro, Ahmedabad Metro, and wheelset manufacturing.

Apart from this, the company is eyeing the export market to benefit from the China plus one sentiment and growing global demand for wagons.

It aims to 'Make in India, Make for the World' and is investing heavily in capex to increase its wagons, and coaches' capacity. It is also working on backward integration of the propulsion system for metro rail, which the company is currently importing from outside.

All in all, a high-order book provides sufficient revenue visibility for Titagarh at least for the medium term.

Currently, the stock is trading at Rs 783. This implies a trailing price to earnings ratio of 36 times, much lower than its 5-year median PE of 48. And it is also lower than its peak PE of 83 times in July 2024.

All being said, it's important to assess the company's corporate governance practices and growth prospects, rather than relying solely on the hype to make informed decisions.

How Titagarh Rail Systems Share Price has Performed Recently

In the past 5 days, Titagarh Rail Systems share price has rallied 12%.

In the past six months though, the stock has taken a heavy beating and is down 40%.

Titagarh has a 52-week high of Rs 1,897 touched on 27 June 2024 and a 52-week low of Rs 655 touched on 4 March 2025.

In the past 1 year, shares of the company have fallen 12%.

Here's a table comparing Titagarh Rail with its peers -

Comparative Analysis

Company	Titagarh Railsystems	Jupiter Wagons	Texmaco Rail
ROE (%)	18.1	27.4	4.9
ROCE (%)	26.4	31.7	10.8
Latest EPS (Rs)	21.5	9.1	5.8
TTM PE (x)	34.6	34.6	23.8
TTM Price to book (x)	4.1	5.1	2.1
Dividend yield (%)	0.1	0.2	0.4
Industry PE	31.8
Industry PB	3.7

Source: Equitymaster

For more details, check out Titagarh's financial factsheet.

Happy Investing.

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