Titagarh Rail Systems is positioning itself for strong long-term growth despite current challenges. Vice Chairman and Managing Director Umesh Chowdhary highlighted the need to assess the company’s progress over several years rather than quarterly results.
Chowdhary noted that the company’s annual revenue grew from an average of ₹300 crore until March 2019 to ₹1,000 crore over the next three years. Last year, the company reached ₹4,000 crore in revenue, with 85-90% stemming from the freight sector.
Titagarh Rail Systems is now focusing on expanding its passenger segment, which could become a significant revenue stream. The company aims to produce 70 coaches per month, or around 800 per year, each valued at ₹10 crore. This could translate into ₹8,000 crore in revenue from the passenger segment within five years, depending on successful execution and order fulfillment.
Chowdhary emphasized that while the freight business will continue to grow, the passenger segment could eventually contribute 60% of overall revenue. He noted that achieving an output of 30-40 coaches per month initially, with a target of 70 per month, should be realized within the next four years.
As of June 2024, the company’s order book shows a near-even split between freight (51.9%) and passenger (48.1%). Despite a slightly underwhelming first quarter, Chowdhary expressed confidence in recovering in the upcoming quarters.
The passenger segment was affected by a delayed start to production for the Bengaluru-Ahmedabad route, but production is expected to begin in the second or third quarter. Meanwhile, the freight segment saw a 13% volume growth year-on-year in the April-June quarter.
Titagarh Rail Systems produced about 700 wagons per month in the first quarter and aims for an average of 900-950 wagons per month for the rest of the year, maintaining a long-term target of 1,000 wagons per month.
In the June quarter, the company reported a slight 0.9% revenue decline to ₹903 crore, while net profit increased by 8.4% year-on-year to ₹67 crore. EBITDA dropped 4% year-on-year to ₹102 crore, with the EBITDA margin narrowing to 11.3% from 11.6% in the previous fiscal year.
