Titagarh Wagons (Buy on listing)

-

 
Invest in railroads
 


Investment summary

âThe growth in core sectors is expected to aid demand for coal, cement, fertilizers and steel thereby increasing the goods traffic. The expected growth in goods traffic coupled with the construction of dedicated rail freight corridor will generate huge demand for wagons from Indian Railways (IR) thus benefiting Titagarh Wagons Ltd. (TWL) in a huge way.

âWith the container traffic expected to grow at 18.3% CAGR in FY08-FY14E and IR opening up containerized operations to private sector players, huge order for wagons is expected to flow from them translating into huge opportunity for TWL.

âWith the plan for metro systems gathering pace, we believe TWL's foray into EMU and metro coach segment would be timely and ensure growth.

âOwing to the boom in infrastructure sector, TWL’s special projects division which manufactures bailey bridges and special equipments for nuclear power plants is expected to benefit hugely.

â Led by increased demand of construction and mining equipments due increased activities in infrastructure sector, TWL's presence in the HEMM equipment segment will ensure strong growth.

Valuation and view

With the boom in Indian infrastructure and the government's thrust on improvement in the Indian rail network, we believe that TWL is well placed to benefit and poised for growth.
 
The only listed company in wagon manufacturing space, Texmaco, has been considered for comparative valuations. Even at the higher price band of Rs610, TWL is valued 21.6x FY08 (annualized) EPS of Rs28.2 as against Texmaco which trades 24.1x FY08 (annualized) EPS of Rs55.
 
TWL is valued at 12x FY08 EV/EBIDTA as against Texmaco which is valued at 15.9x FY08.
 
We see a strong investment opportunity in TWL and thus recommend a Buy on dips.

Popular posts from this blog

IOB capitalises on hike in stake by LIC

-
Indian Overseas Bank rose 1.53% to Rs 46.45 at 10:31 IST on BSE, after the biggest domestic instutional investors Life Insurance Corporation of India hiked its stake in the state-run bank. The bank made this announcement after trading hours on Wednesday, 25 March 2009. Meanwhile, the BSE Sensex was up 126.19 points, or 1.31%, to 9,794.09. On BSE, 31,003 shares were traded in the counter. The stock had an average daily volume of 1.93 lakh shares in the past one quarter. The stock hit a high of Rs 47 and a low of Rs 45.95 so far during the day. The stock hit a 52-week high of Rs 156.80 on 2 May 2008 and a 52-week low of Rs 37.55 on 9 March 2009. The mid-cap bank stock had underperformed the market over the past one month till 25 March 2009, falling 3.17% as compared to the Sensex's 8.60% rise. It had also underperformed the market in the past one quarter, declining 33.94% as compared to the Sensex's 1.04% rise. The bank's current equ The current price of ...
Read more

Lok Housing & Constructions builds on fund raising plans

-
Lok Housing & Constructions jumped 6.99% to Rs 107.90 at 11:20 IST on BSE ahead of a board meeting to consider fund raising options from both foreign and local market, including an institutional placement. Meanwhile, the BSE Sensex was down 50.50 points, or 0.30%, at 15203.73. On BSE, 1.86 lakh shares were traded in the counter. The scrip had an average daily volume of 4.74 lakh shares in the past one quarter. The stock hit a high of Rs 115 and a low of Rs 102 so far during the day. The stock had a 52-week high of Rs 390.50 on 1 January 2008 and a 52-week low of Rs 96.25 on 12 June 2008. The scrip had underperformed the market over the past one month till 12 June 2008, falling 26.55% compared to the Sensex's 10.18% decline. It had also underperformed the market in the past one quarter, falling 31.39% compared to Sensex's 3.24% fall. The small-cap housing projects developer has an equity capital of Rs 42.88 crore. Face value per share is Rs 10. The current...
Read more

economic times picks

-
CMP: Rs 70.50 Target Price: Rs 90 CLSA Asia-Pacific Markets maintains an 'outperform' on Jagran Prakashan, with a 12-month price target of Rs 90. "An economic slowdown notwithstanding, improving literacy and income levels in Hindi heartland imply that drivers for Jagran's growth are still in place. With a 35% ad rate hike in 2008, Jagran continues to narrow the gap with its more expensive English rivals," the foreign brokerage said in a client note, after a Q&A reply from the management. "Rising newsprint prices have made Jagran cautious on launching new editions in FY09 and its focus this year will be profitability. While management has budgeted for a minor increase in FY10 newsprint prices, it believes that prices are likely to peak in Q2FY08 and decline thereon," it added. Neyveli Lignite CMP: Rs 117.15 Target Price: Rs 160 MERRILL Lynch has maintained its 'neutral' rating on Neyveli Lignite, with a price target of Rs 160 ...
Read more