Rs 49 to Rs 813: This railway stock turned into a multibagger in three years; trading in overbought zone

Shares of multibagger Titagarh Rail Systems Ltd hit their all-time high today. The stock has delivered over 1,500% returns to investors in the last three years. The stock of railway wagons maker, which closed at Rs 49 on August 21, 2020 rose to a record high of Rs 813 on August 24, 2023, clocking 1,559% returns on BSE. An amount of Rs 1 lakh invested in the Titagarh Rail Systems stock three years ago would have turned into Rs 16.59 lakh today. In comparison, Sensex has risen 68.76 per cent during the period.

The shares of Titagarh Rail Systems touched an all-time high of Rs 813, rising 12.68% on BSE today. Total 1.29 lakh shares of the firm changed hands amounting to a turnover of Rs 9.98 crore. Market cap of the firm rose to Rs 10,110 crore.

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In terms of technicals, the relative strength index (RSI) of the stock stands at 72.6, signaling it's trading in the overbought zone. Titagarh Rail Systems shares have a beta of 1, indicating average volatility in a year. Titagarh Rail Systems shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

In the last one year, the Titagarh Rail Systems stock has surged 413%. It hit a 52 week low of Rs 136.45 on September 28, 2022. Since then, the stock has recovered 496% from its yearly low.

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Pravesh Gour, Senior Technical Analyst, Swastika Investmart said, "The counter is in a classical uptrend, as it has witnessed a breakout of a flag formation pattern on the longer timeframe, while on the shorter frame it has come out of one month of consolidation with strong volume. The structure of the counter looks good, as it is trading above all its important moving averages, but we have already seen a vertical rally in the last six months. So investors have to apply a buy-on-dip strategy to accumulate this stock. Rs 650-700 will be a good level to take a position. MACD (moving average convergence divergence) is supporting the current strength, whereas the momentum indicator RSI (relative strength index) is also positively poised. On the upside, Rs 815 acts as an immediate hurdle; above this, we can expect a move towards Rs 920. On the downside, Rs 650 is a strong demand zone during any correction."

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Ravi Singh, Vice President and Head of Research, Share India said, "After the Union cabinet approved rail expansion projects worth Rs 32,000 crore, most of the rail stocks are on rise. Titagarh, which deals in manufacturing of railway coaches, wagons will also benefit with this package. On the technical setup, the stock is showing strength on daily and weekly basis and the momentum indicators suggesting a strong move ahead for the target of Rs 850 in the near term after a brief period of profit booking on the counter."

Abhijeet from Tips2trades said, "Titagarh Rail Systems is bullish but also overbought on the daily charts with next resistances at Rs 785 & Rs 823. Investors should book profits at current levels as a daily close below support of Rs 722 could lead to target of Rs 600 in the near term."

Antique Stock Broking in a report said, “Titagarh Rail Systems, a leader in the wagon manufacturing space, now is also among India's few integrated manufacturers of passenger rail systems, the brokerage firm said. The company has created a manufacturing setup which is difficult to replicate and has the capacity to grow its turnover to over Rs 9,000-10,000 crore over the next five years.”

“We expect TRSL (Titagarh Rail Systems) to post earnings CAGR (compounded annual growth rate) of 53 percent over FY23-26, and generate an average RoE (Return on Equity) of over 25 percent,” it said.

Titagarh Rail Systems plans to invest Rs 600 crore over the next three years and recently proposed raising of Rs 289 crore by selling shares to a large investor. This, along with strong cash flow expected in the future, would help the wagon maker meet its growth goals, the brokerage added.

Nine promoters held 44.97 per cent stake in the firm and 141553 public shareholders owned 55.03 per cent or 6.99 crore shares as on July 7, 2023. Of these, 1.37 lakh resident individuals held 2.68 crore shares or 21.14% stake with capital up to Rs 2 lakh. Only 11 resident individuals with 3.71% stake held capital above Rs 2 lakh as on July 7, 2023.

About the Company

Titagarh Rail Systems is engaged in the manufacturing and selling of freight wagons, passenger coaches, metro trains, train electricals, steel castings, specialised equipment and bridges, and ships. The company operates through three segments: freight rolling stock, passenger rolling stock, and shipbuilding, bridges & defence.

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