Titagarh Rail Eyes 65% Revenue Boost From Passenger Trains Business

Titagarh Rail Systems Ltd.'s passenger rail vertical will contribute nearly 65% to its overall revenues over the next five years, according to Deputy Chief Executive Officer (Passenger Rail) Prithish Chowdhary.

The passenger rail systems contributed 11.3% to Titagarh Rail Systems's revenue in the financial year-ended March 2024 and 19% of overall company's revenue in the preceeding quarter, according to a stock exchange filing.

"Going forward, you will see the execution of all the orders that we have won in the subsequent quarter that have come up now," Chowdhary said.

He believes that the passenger rail system has greater potential for growth compared to the freight rail system. "We expect big revenue from Vande Bharat in FY26–27," he said.

Shares of Titagarh Rail Systems surged to their highest level since mid-January after its fourth-quarter profit soared, meeting analysts' estimates.

The net profit of the company rose 63.7% year-on-year to Rs 79 crore during the quarter ended March 2024, according to an exchange filing. Freight rail systems drove Titagarh Rail Systems' overall revenue growth. While revenue from passenger rail systems declined.

"We are aiming for a higher Ebitda margin of 10–12%, up from 9–11%, due to increased production. In March, we hit a record 1,080 wagon production. For the passenger business, operational costs are currently high, but once production starts next quarter, we expect margins to improve. By producing 15-20 coaches monthly, we aim for a 10% Ebitda margin by year's end or next year. Further enhancements are expected as we integrate propulsion technology with ABB," Chowdhary said.

"Overall, we're targeting 10-12% Ebitda margins annually," he shared.

The company secured the Pune Metro order in 2019 and is currently in the process of completing it, with completion expected soon. Other orders, such as the Surat Metro, Ahmedabad Metro, Vande Bharat, and Bengaluru Metro, which are being carried out in partnership with CRRC, are scheduled to commence execution in Q2 of this fiscal year.

"This explains the minimal impact on the revenue figures for the passenger rail system sector. There is currently only one order in the execution stage and another in the design stage, waiting for execution to begin," he said. . The unevenness in performance can be attributed to our recent entry into this field. This business venture was initiated in 2019 in India, hence the current phase of ramping up, he said.

"We have already hit a production value of 1,000 in the month of March in the freight rail system, and the months before that, this year we hope to stabilise that run rate," Chowdhary said.