Published On:July 4 2024
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Titagarh Rail Systems Announces ₹900 Crore Investment in Passenger and Freight Sectors.

Titagarh Rail Systems Announces ₹900 Crore Investment in Passenger and Freight Sectors.

Titagarh Rail Systems, India's largest wagon-maker, plans to invest nearly ₹900 crore over the next three to four years to enhance its passenger and freight businesses. The majority of this investment, approximately ₹800 crore, will be allocated to the high-margin passenger business, while around ₹80 crore will be directed towards the traditional freight business over the next two years.

Anil Agarwal, Deputy MD and CEO of the Freight Rail System division at Titagarh Rail Systems, revealed that the company has already invested ₹150-200 crore in the past two years to boost the freight vertical and meet the rising demand. The Kolkata-headquartered company has expanded capacities at its Titagarh facility, located a few kilometers from the state capital. By the end of FY24, capacities increased from 700 wagons per month to over 900 wagons per month, with plans to reach around 1,000 wagons per month in the next two to three years.

“Our current run rate indicates that we will be at 1,000 wagons per month by this fiscal-end and aim to maintain this level for the next two to three years. Compared to last year, our revenue target from the freight vertical is around ₹4,500-5,000 crore,” Agarwal told businessline. Last year, the vertical reported a turnover of approximately ₹3,200 crore.

EBITDA (earnings before interest, tax, depreciation, and amortization) is expected to be in the 12-12.5 percent range, an improvement of 100-200 basis points year-over-year. The company’s capacities are divided in a 75:25 ratio between Indian Railways and private players, with the freight business currently accounting for nearly 85 percent of the company’s turnover.

Titagarh Rail Systems reported a consolidated turnover of ₹3,900 crore in FY24, with a profit of ₹289 crore. Recently, BlackRock Global Funds acquired a 1.6 percent stake in the company through block deals.

The company is also ramping up capacities in the passenger coach vertical to 850 annually, with each coach priced at an average of ₹10 crore. This vertical has higher margins and turnover potential compared to the freight business, with the potential for revenue generation around ₹8,000-8,500 crore as the ramp-up is completed.

“Work in the passenger coach vertical includes electrical, interiors, and other aspects, with the average cost per coach ranging from ₹7-12 crore, depending on whether it is Vande Bharat or a Metro,” Agarwal said.

As revenues start to flow in from the passenger coach vertical, Titagarh Rail Systems expects the turnover mix to shift to a 50:50 or 60:40 ratio between passenger and freight businesses. The company is scheduled to deliver the first set of coaches for Bengaluru metro’s yellow line in August 2024. The order book for the company stood at 22,000 wagons, or around ₹7,800-8,000 crore, as of April 1, the beginning of this fiscal year.

HBL





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