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With a Buy rating, the international brokerage raised the target by 23%. Jefferies said Titagarh Rail Systems delivered a stronger-than-expected quarter, and improving execution is likely to drive a re-rating of the stock going forward.

The brokerage believes Titagarh is well-positioned to benefit from rising demand for passenger and metro coaches, supported by government-led infrastructure initiatives. It estimates a 44% EPS CAGR over FY26-30 and expects the company’s strong order book in the passenger segment to provide healthy earnings visibility.

Titagarh delivered 64 coaches in FY26, ahead of Jefferies’ estimate of 60 coaches. While this fell short of the management’s earlier guidance of 100-120 coaches, the shortfall was largely anticipated due to execution delays in the first half of FY26.

Management has reiterated confidence in delivering 200-220 coaches in FY27, compared with Jefferies’ estimate of 193 coaches, citing the resolution of initial execution challenges. On the flagship Vande Bharat project, the company expects to deliver two trains in FY27, in line with Jefferies’ projections, with the prototype scheduled for supply in the December 2026 quarter.

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Margins in the March quarter came in significantly ahead of expectations at 19%, compared with Jefferies’ estimate of 12%, supported by a sharp increase in execution of the Bengaluru Metro project, which is being executed as a job contract. Management has guided for margins of around 12% in the near term, with a gradual improvement towards 15% as the company advances up the technology value chain.
Rail wagon sales declined 29% year-on-year due to supply-side constraints. While Jefferies expects wagon sales to fall a further 5% in FY27, it forecasts a largely stable trajectory over FY27-30, supported by its estimate that Indian Railways’ cargo volumes could reach around 3 billion tonnes by FY35, compared with the FY30 target.The company currently has an order book of 6,500 wagons, providing visibility for about 97% of Jefferies’ FY27 wagon sales estimates, although visibility beyond FY27 remains limited. Separately, Titagarh has secured 28% capital assistance for its brownfield shipbuilding expansion plans and is evaluating technology partnerships and potential joint ventures with shipyards.

The brokerage noted that a recent report by Live Mint indicated Indian Railways is considering an order for 1 lakh wagons, which could significantly improve earnings visibility for wagon manufacturers.

The valuation assigns 30x March 2028 estimated EPS to the core business, up from 25x previously, reflecting positive developments around potential wagon orders and the upcoming wheel joint venture, which it values at 2.5x its investment value. Key risks to the outlook include delays in wagon orders or wheel supplies from Indian Railways, as well as weaker-than-expected execution.

Titagarh Rail Q4 snapshot

Titagarh Rail reported a net profit for the quarter at Rs 53.96 crore, compared to a net loss of Rs 122.4 crore that the company reported last year.

Titagarh Rail’s revenue in the March quarter declined by 12.9% to Rs 875.4 crore from Rs 1,005.6 crore in the previous year.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) declined 4.4% to Rs 97.3 crore in the March quarter from Rs 96.56 crore last year, while margins stood at 11% from 10% last year.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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New research on their impact has been carried out by Oxford Economics on behalf of Allica Bank

Established SMEs in Wales out punch their weight in terms of their contribution to jobs in the Welsh economy, show new research.

A report , carried out by Oxford Economics on behalf of Allica Bank, shows that established businesses account for over two in five jobs in the private sector despite making up just 22.8% of the Wales’ business population.

Established SMEs are firms with between five and 250 employees – of which in Wales there are 23,965.

Their contribution of 44% of all private sector jobs in Wales, is nine percentage points above the UK average of 35%, and significantly higher than London, where established businesses account for 30% of private sector employment. Of the nations and regions of the UK, the rate is only higher in Northern Ireland at 46%

Across the UK, established businesses are a critical driver of economic activity, accounting for more than a third of private sector employment and 37% of private sector turnover. They also support almost one in every two private sector jobs in rural areas.

Given their importance to growth, the report also highlights the challenge many established businesses face in accessing the finance they need to invest. The report highlights a £65bn lending gap to UK SMEs, accumulated over the past 25 years, which is restricting the finance and working capital available to businesses that want to expand, boost productivity and create jobs.

It also shows the impact that can be unlocked when established businesses can access the finance they need. In 2025, Allica Bank’s lending to established businesses enabled an estimated £520m contribution to GDP in Wales and supported 8,700 jobs locally.

UK-wide, 78% of the GDP contribution and 80% of the employment impact supported by Allica Bank’s lending occurred outside London and the south east, underlining the role productive finance can play in supporting local economies.

Conrad Ford, chief product and strategy officer at Allica Bank, said:“I speak to established businesses all the time and you quickly see how important they are to their local areas. These are the manufacturers, logistics firms, hospitality operators and specialist businesses that employ local people, support supply chains and keep communities thriving.

“The report puts numbers behind that. Although established businesses make up a minority of the wider SME business population, they account for around 60% of private sector employment.

“In 2025, Allica Bank’s lending to established businesses enabled an estimated £8.4 billion contribution to GDP in the UK and supported 118,000 jobs across the country. That shows what can happen when established businesses get the finance they need to invest and grow.”