Titagarh Wagons to mull fund raise on June 10; stock hits 52-week high

Shares of Titagarh Wagons surged nearly 5 percent to a 52-week high in early trade June 8, a day after the company said it will consider a proposal to raise funds on June 10. The fund raise will be done either through a rights issue, preferential share issue, or the qualified institutional placement of equity shares.

Going ahead, investors will remain focused on the route that the company chooses for the fund raise. In case of a rights issue, the company would likely decide for a floor price that is lower than the market price of the stock. If the company does decide to take this route, the stock is also likely to witness a knee-jerk reaction, as investors may book some profits.

As for the QIP route, sentiment for the stock may improve if the company decides on a floor price that is at a premium to the current market price of the stock.

At 09.17 am, shares of Titagarh Wagons were trading at Rs 409 on the NSE, up 4.60 percent from the previous close. The stock also hit a 52-week high of Rs 410 intraday.

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Fresh identity

Recently, the company also rebranded itself from Titagrah Wagons to Titagarh Rail System. In a recent interview with CNBC-TV18, Umesh Chowdhary, VC and MD of Titagarh Wagons, said with the new name, Titagarh Rail Systems aims to showcase its expertise in not just wagon manufacturing, but also various other aspects of rail infrastructure development and modernisation. The company also decided to merge the shipbuilding business, which is in defence segment with the freight rail system segment.

The company also posted a strong financial performance for the quarter ended March. Net profit for wagon manufacturer jumped over twofold on year to Rs 48 crore while revenue surged 131 percent to Rs 974.21 crore.

“We believe Titagarh Wagons is well placed to make a mark in the passenger business, after having achieved leadership in the freight segment. The ongoing metro rail boom in India and the impending rollout of high-speed rail travel in the country should further cement its position,” Nuvama Institutional Equities stated in its report.

Sentiment for railway stocks are running high, especially on the back of the government’s strong capital expenditure plans for the sector. Cashing in the upbeat sentiment, the stock has also gained 285.26 percent in the past year, making it a multibagger.

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