Titagarh Wagons eyes turnaround in Italy business

Abhishek Law Kolkata | Updated on June 10, 2021

Standalone business (primarily India) started picking up from Q2FY21 onwards, while in Italy, the first nine months were impacted due to pandemic

Kolkata-based Titagarh Wagons, a railway-wagon-maker and mobility solutions-provider, is eyeing a turnaround in its Italy business, while the Indian operations continue to remain stable with a “healthy order book”.

Standalone business (primarily India) started picking up from Q2FY21 onwards, while in Italy —the focus-European market —the first nine months were impacted due to the pandemic. Pick-up began last quarter (January-March) onwards.

Order book

At the end of March 2021, the order book was ₹5,061 crore. Italy constitutes 47 per cent and the standalone order book stood at ₹2,682 crore.

According to Umesh Chowdhary, Vice-Chairman and Managing Director, Titagarh Wagons, “Overall trends and demand-pipeline are positive.”. After one of the worst hit years in Italy, opening-up is happening. Order executions are much better now, he said.

The Italian entity, Titagarh Firema SPA Italy (TFA), reported revenue of ₹565.6 crore, a near-84 per cent YoY growth in FY21; while it reported a negative EBITDA of ₹20.5 crore. Margins were impacted due to lower capacity utilisation.

“We are hopeful of a turnaround in European operations this fiscal (FY22). Various cost optimisation measures have been initiated there and we expect Q4FY21 trends to continue into the current fiscal,” he told BusinessLine adding that: “New passenger carrying norms (fewer passengers on trains) are expected to be introduced in Europe and this is likely to lead to more rolling stock. New contracts are likely to come up too.”

Higher margin-order book delivery is expected to drive profitability at the consolidated level, the company said in an investor presentation.

India Business

According to Chowdhary, Indian operations “have stabilised” with over 50 per cent of the orders coming from “non-wagon businesses”, that include passenger rolling stock, shipbuilding and defence and bridges verticals. Majority of the freight rolling stock order comes from Railways.

Over the last 18 months, the company has invested ₹100 crore to upgrade manufacturing facilities across verticals as it looked to reduce dependence on wagon-orders.

“We had been consciously working on a strategy to get into new verticals like Metro Railway projects and propulsions. Investments were being made in facilities. India businesses look stable,” he said.

Standalone revenues saw a 31 per cent drop to ₹1040 crore for FY21 from ₹1500 crore-odd as operations during the year were impacted due to Covid-19 induced lockdown especially during first half of the year. “We delivered topline growth from the second quarter (July-Sept FY21) onwards. We expect revenues to move up in FY22 and pent-up demand to drive recoveries,” Chowdhary said adding that EBITDA margins (standalone) improved by 287 basis points 12.6 per cent.

While cash flows were “strong” at ₹225 crore, the company became “net debt free”. Titagarh Wagons repaid ₹12.50 crore during the fiscal. While its long term debt stood at ₹100 crore, the company also has a “cash equivalent” to that tune.

Published on June 10, 2021

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