Results Impact: Titagarh Rail Systems declines 8% on subdued Q1 earnings

Shares of Titagarh Rail Systems saw an 8 percent drop in intra-day trading on Wednesday, driven by the company's underwhelming performance for the quarter ending June 2024 (Q1FY25).

The wagons manufacturer reported an 8.4 percent year-on-year increase in net profit, reaching ₹67 crore, up from ₹61.79 crore in the same period last year. However, the company's revenue dipped by nearly one percent, falling to ₹903 crore from ₹910.80 crore in the corresponding quarter of the previous fiscal year.

On the operational front, Titagarh experienced a 4.1 percent decline in EBITDA , which dropped to ₹101.7 crore from ₹106.1 crore in the year-ago period. This decline in revenue also impacted the company's operating performance, with the EBITDA margin contracting by 50 basis points year-on-year to 11.2 percent.

This financial performance triggered a significant drop in Titagarh's stock price, which fell as much as 7.9 percent to an intra-day low of ₹1,548.95. The stock is now over 18 percent below its record high of ₹1,896.50, achieved just last month. Despite this recent dip, Titagarh's stock has demonstrated strong growth over the past year, surging 158 percent from its 52-week low of ₹611.95 on August 14, 2023. In 2024 alone, the stock has advanced over 54 percent.

July has been a challenging month for Titagarh, with the stock losing over 13 percent following three consecutive months of gains. It saw a 31.4 percent increase in June, a 33.7 percent rise in May, and a 15.11 percent uptick in April. However, the stock experienced a 2 percent decline in March and a significant 14.2 percent drop in February. January 2024 saw a modest rise of 4.7 percent.

During Q1FY25, Titagarh secured orders worth ₹350 crore, including ₹250 crore for freight rolling stocks and ₹100 crore for propulsion systems. By the end of the June quarter, the company’s order book included orders for 20,300 wagons and 1,592 metro and Vande Bharat coaches.

The subdued earnings report prompted investors to partially take profits, especially considering the stock's impressive performance over the past year, delivering over 145 percent returns. The combination of a slight dip in revenue and a decrease in operating performance led to this profit-taking, as investors reassess the stock's future growth prospects.

Overall, while Titagarh Rail Systems has shown robust long-term growth, its recent financial results have led to short-term market volatility. Investors are now watching closely to see if the company can rebound and continue its upward trajectory in the coming quarters.