Titagarh Rail soars 12% post ABB partnership for Metro Projects

Titagarh's shares price hit a new high of ₹1,045, reflecting a 12% surge on the BSE. After Titagarh Rail Systems and ABB have entered into a strategic partnership to supply propulsion systems for metro rolling stock projects in India. This collaboration, in line with the government's "Make in India" and "Atmanirbhar Bharat" initiatives, has propelled.

Details of the Partnership

The partnership entails Titagarh's acquisition of ABB propulsion systems, covering traction converters, auxiliary converters, traction motors, and TCMS software. Additionally, Titagarh secures manufacturing rights, production licenses for traction motors, and a complete transfer of technology for the GoA 4 (Driverless metro) TCMS software.

The collaboration aims to establish both companies as key players in the Indian market while eyeing global expansion. The partnership has already yielded success with orders for metro coaches in Gujarat, emphasizing its immediate impact.

Titagarh Rail Systems has not only clinched the largest-ever order for wagons from Indian Railways but has also secured orders for metro trains in prominent cities such as Pune, Bangalore, Ahmedabad, and Surat. As of September 30, 2023, the company's order book stands at an impressive ₹28,212 crore.

Financial Performance

Titagarh reported robust financial performance for Q2FY24, with a 46.4% growth in consolidated net profit at ₹70.59 crore from ₹48.2 crore in the corresponding period last year. Revenue from operations in the same period surged by 54% to ₹935.45 crore from ₹607.11 crore in the year-ago period.

Stock Performance

Titagarh Rail Systems' stock has been on a remarkable upward trajectory, surging 25% in the last three trading days, marking a 30% increase over the past month. Moreover, over the last six months, the stock has seen a substantial rise of 113%, and in the current calendar year, stock is up 115%. This impressive performance far exceeds the modest 7.7% rise observed in the S&P BSE Sensex during the same period.

Future Growth Initiatives

In November, the company disclosed its plan to seek a strategic partner for its shipbuilding, bridges, and defense business. As part of this strategy, it aims to raise up to ₹700 crore through a Qualified Institutions Placement (QIP). As per the company’s official filing, funds raised through the QIP will be allocated towards supporting future growth initiatives and fortifying its position in its core business areas.

Management Commentary

Edgar Keller, President of ABB's Traction Business, emphasized that the strategic partnership not only allows ABB to expand its footprint in India but also supports sustainable rail transportation through energy-efficient technology.

Umesh Chowdhary, the Vice Chairman and Managing Director of Titagarh highlighted that the company has already established manufacturing facilities for components within the propulsion chain, working towards creating a comprehensive solution. Titagarh specializes in the comprehensive process of designing, manufacturing, supplying, commissioning, and servicing a variety of passenger rolling stock and metro coaches, catering to both Indian and international markets.

On the other hand, ABB holds a prominent global position in designing, manufacturing, and servicing propulsion systems and electrical equipment specifically designed for rolling stock in railways and metro systems.

Final Words

The Titagarh Rail Systems and ABB partnership stands as a milestone in India's rail infrastructure development. With impressive financials, a robust order book, and a clear strategic vision, Titagarh is poised for continued success, contributing significantly to the nation's metro projects and reinforcing its commitment to self-reliance.