Titagarh Rail Systems, the country’s largest wagon-maker, will invest close to ₹900 crore over the next three to four years as it looks to ramp up both passenger and freight businesses. The majority of the investment – around ₹800 crore – will go towards the high-margin passenger business, and around ₹80 crore-odd is expected to go into the traditional freight business over an immediate two-year timeframe.

According to Anil Agarwal, Deputy MD and CEO of the Freight Rail System division at Titagarh Rail Systems, the company has already invested ₹150-200 crore over the last two years as it ramped up the freight vertical and is already catering to an increased demand there.

The Kolkata-headquartered company invested in increasing  capacities at its Titagarh facility, a few kilometres off the state capital. As of FY24 end, capacities were increased from 700 wagons per month to around 900 plus as on FY24-end (the average for the January–March period of 2024).

With further investments, this would be around 1,000 wagons per month – a consistent target for the next two-to-three-year period.

“So, our current run rate indicates that we will be at 1000 wagons per month by this fiscal-end; and would like to maintain it at than range for the next two to three years. As against last year, our revenue target from the freight vertical is around Rs 4500 – 5000 crore,” Agarwal told businessline. Last year, the vertical reported a turnover of ₹3,200 crore (aprx).

EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to be in the 12–12.5 per cent range (an improvement of 100–2,000 basis points y-o-y).

Capacities are being spread out in the 75:25 ratio between Indian Railways and private players. Currently, freight business accounts for close to 85 per cent of the company’s turnover.

Titagarh Rail Systems reported a consolidated turnover of Rs 3900 crore in FY24, while its profit stood at ₹ 289 crore. Recently, BlackRock Global Funds picked up a 1.6 per cent stake via block deals.

Passenger Vertical

The capacities in the passenger coach vertical are being ramped up to 850 annually, with each coach being priced at an average of ₹10 crore. The vertical has a better margin and a higher turnover than freight businesses. The potential for revenue generation is around ₹8,000–8,500 crore as full ramp-up happens.

“Scope of work in the passenger coach vertical is higher. It includes electrical, interiors and so on with the average cost per coach being in the ₹7–12 crore range depending on whether it is Vande Bharat or a Metro,” Agarwal said.

For Titagarh Rail, as revenues start coming in from the passenger coach vertical, the turnover mix would change to a 50:50 or 60:40 ratio (passenger: freight). 

The company is expected to deliver the first set of coaches for the Bengaluru metro’s yellow line in August 2024.

Order book for the company stood at 22,000 wagons or around ₹7,800–8,000 crore as on April 1 (the beginning of this fiscal year).