Texmaco Rail‘s share price has been on a joyride at the bourses over the past year. Shares of the company have more than doubled in the past year. Now analysts at ICICI Securities see the stock going up even further.

The Texmaco Rail Analyst: The analyst team at ICICI Securities resumed coverage on the stock with a “buy” rating and a target price of ₹325. The target indicates an around 34% upside from the stock’s last closing price of ₹243.40.

The Texmaco Rail Thesis: ICICI Securities said that the company recorded a 36% year-on-year (YoY) growth in revenue to ₹890 crore. This growth was mainly driven by the execution of the company's large order book, particularly the around 4,000-wagon backlog from FY24, the brokerage added.

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ICICI Securities noted that Texmaco's order book has expanded to ₹7,900 crore from ₹3,400 crore in FY21, driven by increased tendering and award activity by Indian Railways and the private sector.

The analysts added that the Indian Railways plans to procure about 1.50 lakh wagons over the coming years could result in an annual industry demand of 30,000–40,000 wagons, ensuring strong demand visibility for Texmaco.

A potential demerger of Texmaco's rail EPC business, which has been underperforming, is also under consideration, the brokerage said in its note. This segment reported its second consecutive quarterly loss, largely due to legacy projects.

The demerger could eliminate this drag on profitability, allowing the wagon maker to focus on its strengths in freight wagons, casting, high-value components and infra-electrical businesses.

Price Action: Texmaco Rail’s share price was up 3.84% to trade at ₹252.75 on Friday evening.

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