Railway Stock Soars 6% As Brokerage Initiates Coverage, Sees 24% Upside Ahead

Titagarh’s share price jumped back in the green on Tuesday after ending Monday down over 2%. The stock surged up over 6% to hit an intraday high of ₹1,100.

What Happened: The surge today comes as Morgan Stanley initiated coverage on the Railway stock. The brokerage firm has an “overweight” rating on the stock with a price target of ₹1,285. The target implies an around 24% upside from the stock’s last closing price of ₹1,034.15.

Morgan Stanley is upbeat about Titagarh’s prospects, as it sees strong evidence of a revival in India’s railways. The analysts think that Titagarh is a major beneficiary of this trend. The brokerage said that the freight sector business is a cash cow for the company, while the passenger business is seen as a new growth engine.

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The firm expects the railway infra company to achieve a 28% earnings compound annual growth rate (CAGR) over the period of FY24 to FY27. The brokerage firm also highlighted the company could also look to drive export growth through low-cost local manufacturing.

In terms of valuation, Morgan Stanley considers a price-to-earnings (PE) ratio of 35x FY26 as fair, given Titagarh’s strong earnings visibility and improving return ratios.

Price Action: Titagarh’s share price was up 5.84% to trade at ₹1,094.50 as the markets opened on Tuesday.

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