Titagarh Wagons Buy Zone Rs. 90, Target Rs. 840.
Titagarh Wagons share has given around 300% gain to its investors in past year. Right now it is trading at its lifetime high and investors are confused whether to enter this stock or not.
In the stock market we are often confused what is the right time to enter in a stock so that we end up getting profits .
Through our method of calculating share price targets, let us try to find out if it is the right time and right price to enter Titagarh Wagons and become part of the rally.
Titagarh Wagons Share Price
About Titagarh Wagons
Incorporated in 1997, it manufactures freight wagons, passenger coaches, metro trains, train electricals, specialized equipments, ships, etc.
It is the largest wagon manufacturer with a capacity of 8400 wagons per annum.
It caters to both domestic and export demands.
It has recently made a capex of 100 Cr. to increase its production and cost-effectiveness.
It is involved in the manufacturing of wagons for Vande Bharat by Indian Railways.
This order from Indian Railways made the share price soar high.
Promoters have recently increased their stakes by 2%.
Read More: Stock to buy now : TCS
| Market Capitalization | 4110 |
| ROCE | 7.67 |
| Debt to Equity | 0.39 |
| Profit Growth | 30.3 |
| PEG Ratio | |
| Pledged Percentage | 0 |
The financials indicate that it is a microcap company with a Low ROCE and manageable debt. Recently the company has shown high-profit growth.
Over the years, the company has increased its sales and profit considerably every year but the down side is very low Operating Profit.
Very Low Operating profit is the biggest flaw in the balance sheet. Since Operating Profit is low, Net Profits get further lowered after paying interest and taxes.
Read More : IRCON Intl. Ltd. News
Titagarh Wagons Share Price Target
According to our calculations the following table depicts the share price targets in Base case, Bear case and Bull case.
Investors and traders could use bear case prices for entering the stock and bull case prices for exiting within a particular time frame of their choice.
| Year | Share price (Bear Case) | Share Price (Base Case) | Share Price (Bull Case) |
| 2022 | 80 | 129 | 241 |
| 2023 | 90 | 144 | 270 |
| 2024 | 101 | 161 | 303 |
| 2025 | 113 | 181 | 339 |
| 2026 | 127 | 203 | 380 |
| 2027 | 142 | 227 | 425 |
| 2028 | 159 | 254 | 476 |
| 2029 | 178 | 285 | 534 |
| 2030 | 199 | 319 | 598 |
| 2031 | 223 | 357 | 669 |
| 2032 | 250 | 400 | 750 |
| 2033 | 280 | 448 | 840 |
Assumptions to Calculate Titagarh Wagons Share Price Target
For calculating these share prices we have done some assumptions like:-
Assumed Sales Growth
The company has hardly shown a sales growth of 8% in the past 10 years and 38% in TTM. Since it has bagged some prestigious orders and it is trying to expand to increase its production Let us assume that the sales of this company will keep on growing by 12% every year for at least 10 years.
Assumed Sales Growth = 12%
Read More:- IRCTC Share Price Target
PAT Margins
Operating Margins are very low from 1% to only 8%. PAT margins are even lower because of the deduction of interest and depreciation. Titagarh is just making other income of 20-25 Cr. which is much less than the interest being paid.
Titagarh Wagons was a loss making company until Mar’2021. It has posted positive results on in 2022 and TTM with PAT margins of just 2.27%.
Lets take PAT Margins = 2%.
PE
Credit: www.screener.in
Titagarh Wagon has shown highly variable PE between 9-232.
PE graph seems highly complicated as the company mostly posts losses and when a company post losses then PE is not counted.
Median PE is 50. This company seems mostly undervalued or overvalued.
We take PE Base = 40
PE Bear = 25
PE Bull = 75
Projected Sales and Net Profit of Titagarh Wagons
Taking sales growth as 12% and PAT Margins as 2%, then Projected Sales and Projected Profits for the next 10 years will be as follows:-
| Year | Projected Sales ( In Cr.) | Projected Net Profit ( In Cr.) |
| 2022 | 1931 | 39 |
| 2023 | 2163 | 43 |
| 2024 | 2422 | 48 |
| 2025 | 2713 | 54 |
| 2026 | 3038 | 61 |
| 2027 | 3403 | 68 |
| 2028 | 3811 | 76 |
| 2029 | 4269 | 85 |
| 2030 | 4781 | 96 |
| 2031 | 5355 | 107 |
| 2032 | 5997 | 120 |
| 2033 | 6717 | 134 |
The graph clearly shows that with increased sales the net profits donot grow much. This is just because of low margins.
Some improvements can be expected when the company becomes debt free and all the interest gets added to the net profit. With capex going on, it may take time.
Titagarh Wagons Share Price Target 2023
| Year | Share price (Bear Case) | Share Price (Base Case) | Share Price (Bull Case) |
| 2023 | 90 | 144 | 270 |
Titagarh Wagons is currently trading at levels of 350 which is much higher than our expectations and calculations.
This soaring in the share price is because of people taking interest in railway stocks after Vande Bharat Express announcements.
This share price seems over exaggerated according to our analysts and may not sustain.
Read More : Bajaj Finance Share Price Prediction
Titagarh Wagons Share Price Target 2025
| Year | Share price (Bear Case) | Share Price (Base Case) | Share Price (Bull Case) |
| 2025 | 113 | 181 | 339 |
One of its subsidiaries Titagarh Firema, has bagged the order of Metro of Lazio Regione, Italy for its designing, manufacturing, and maintenance for the next 10 years.
This accounts for 2380 Cr.
Read More : Mankind Pharma Share Price Prediction
Titagarh Wagons Share Price Target 2030
| Year | Share price (Bear Case) | Share Price (Base Case) | Share Price (Bull Case) |
| 2030 | 199 | 319 | 598 |
Titagarh Wagons is trying to diversify and grow its portfolio other than wagons so as to increase its revenue from other fields as well.
For this it has acquired Precision Shipyard in West Bengal. After this acquisition the company could functionally merge two of its facilities for smother operations of specialized shipbuilding activities.
It is focusing in this ship building business which it can enhance in the future.
Read More: Gland Pharma Share Price Prediction
Titagarh Wagons Share Price Target 2033
| Year | Share price (Bear Case) | Share Price (Base Case) | Share Price (Bull Case) |
| 2033 | 280 | 448 | 840 |
With increase demand of Vande Bharat trains and manufacturing of maetro trains in other metro cities can give this company a great boost.
Conclusion
Titagarh Wagons is a railway stock and railway stocks are currently in trend.
Titagarh Wagons is a company which has a several crores of orders inline.
The stock market always moves ahead of time. Share prices of a company may increase even before it has already given good results. Same thing happened with IT stocks and they showed rally in 2021-22.
According to our analyst, if you are a short-term and full-time trader, you can speculate on it and take benefit of the momentum.
For part-time traders and long-term investors, this is not a stock to enter not at least at this point of time when it is at its lifetime high.
It is not a fundamentally strong stock. It has posted profits in only two quarters i.e Sept and Dec’22. It had been posting losses since 2014. Only 2017 was a profit making year.
It works on very low operating profits (3-8%) which further shrinks down PAT margins (1-3%).
This is because of variable material and employee cost.
Although the company is making a lot of sales, these sales are not turning into profits because of low margins.
It has low ROCE and ROE and debt is also there to be repaid.
The company has a lot of expansion plans. Promoters and FII are increasing their stakes into it.
News regarding gaining a tender for Vande Bharat Trains has made the share jump considerably.
Regular retail investors who are doing part–time trading should not enter this stock at current levels. They may get stuck up.
FAQ
Is Titagarh Wagons Debt Free?
No, Titagarh wagons has a borrowings of 341 Cr.
Is Titagarh Wagons a private company?
Yes, It is owned by Titagarh Capital Management Services Private Limited, J.P. Chowdhary etc.
Read More : IEX Share Price Target
Use the link to open a Demat account in Zerodha.
Disclaimer- All investments and trading in the stock market involve risk. Any decision to place a trade in the financial markets, including trading in stock should only be made after thorough research. Trading strategies or related information mentioned in the article is for informational purposes only. Use your due diligence before investing. These are just predictions. They may or may not be true. We are not SEBI-registered research analysts.