homebusiness Newscompanies NewsTitagarh Rail expects the defence vertical to be a key growth driver in 3 4 years
Titagarh Rail expects the defence vertical to be a key growth driver in 3-4 years
Umesh Chowdhary, Vice Chairman and MD of Titagarh Rail Systems said the defence vertical is a 'reserve engine for growth' while the passenger and freight rail businesses continue to have a strong run.
Kolkata-based Titagarh Rail System expects its defence vertical to become the third pillar driving the company's growth over the next 3-4 years. The current focus though is on railways comprising the passenger and freight rail businesses.
“We are keeping this (defence) as the reserve engine for growth. The two engines that we have -- the passenger rail side and the freight rail side are firing on full guns. The defence business will be the third engine of growth that will come post that,” said Umesh Chowdhary, the company's Vice Chairman and MD, in an interview with CNBC-TV18.
Chowdhary said the company may even consider strategic partnerships to scale the defence business, if needed.
On February 17, Titagarh received a ₹170 crore order to supply 250 specialised wagons to the Ministry of Defence. Execution of the contract is scheduled to start 12 months after signing the contract and the order is to be completed in 36 months.
"This business (the new order), while it is from the Ministry of Defence, could actually get counted in our freight rail system business itself. In terms of the overall size of the business from the defence side, we are primarily focusing on the naval part of it, the shipbuilding part of it," he noted.
The defence vertical, he said, currently has a very small share in terms of order book as well as revenues, adding that out of ₹28,000 crore order, the defence business is about ₹350-400 crore.
Almost 90% of the company’s revenue comes from the freight rail side and passenger business is about to pick up. Orderbook is equally divided between the freight and the passenger business.
On the freight side, the company has already touched 1,000 wagons per month in December. The next target is to stabilise from 700-750 wagons per month on average to 1,000 wagons per month in the coming financial year FY25.
The company, previously known as Titagarh Wagons, is a prominent Indian rolling stock manufacturer operating within the private sector.
The rail mobile solutions include Freight Wagons, Semi High-Speed Trains, Metros, Transit and Propulsion Systems, as well as Passenger Coaches. These products cater to the needs of the Indian Railways and are also exported to international markets.
Titagarh's passenger business will start delivering revenue both on topline and bottomline in the later part of FY25 when the Surat, Ahmedabad Vande Bharat train will come into production. “The first train of Vande Bharat is likely to be delivered in June 2025,” he said.
According to the contract, the company has to deliver the first two trains in June and August 2025 and thereafter, it will gradually ramp up to approximately two plus trains per month, he mentioned.
Titagarh entered into a strategic alliance with ABB in November 2023 for metro projects in the country. The agreement also included the transfer of technology.
In December 2023, the company raised ₹699.9 crore by issuing fresh shares to qualified institutional buyers (QIP). Titagarh intends to utilise the QIP proceeds to repay some outstanding debt, fund some working capital requirements, and for general corporate purposes, the report added.
The market capitalisation of Titagarh Rail Systems is ₹12881.55 crore. The stock has gained close to 111% over the past year.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Feb 19, 2024 3:44 PM IST
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