Titagarh Rail Systems shares surged following Jefferies' 'Buy' rating, citing robust growth prospects in passenger and metro coaches driven by increased railway spending. The brokerage forecasts significant revenue and EPS growth, projecting a substantial rise in return on equity. In contrast, Jupiter Wagon received an 'Underperform' rating due to its higher valuation and slower growth expectations.

Titagarh Rail shares rally 16% in two days. Here's why Jefferies is bullish on this railway stock

The shares of Titagarh Rail Systems rallied around 16% in just two sessions after international brokerage Jefferies initiated coverage on the stock with a 'Buy' call, stating that strong rise in spending on passenger coaches, locomotives, and wagon, with a focus on safety, modernization, and Vande Bharat trainsets, will act as strong tailwinds.

Jefferies in its note said that it expects 10% FY26-FY30 CAGR in Indian Railways rolling stock spending. It highlighted that India’s metro rail network expanded 4 times between FY14 and FY25 to approximately 1,000 km, and it expects that to double to 2,000 km by FY33, driven by urbanisation and a strong project pipeline.

“We believe Titagarh will be a key beneficiary of rising passenger and metro coach demand,” Jefferies said. It estimates 35% revenue and 43% EPS CAGR in FY26-30, led by 14x rise in its passenger segment revenue over FY26-30, with a strong order book lending visibility. It also expects the railway company’s PRD margin to improve as it moves up the technology value chain. “We expect RoE to double from 6% in FY26E to 13% by FY28E and 16% by FY30E, led by rising plant utilisation,” the note stated.

Strong upside potential in Titagarh Rail shares

Jefferies kept a target price of Rs 810 apiece for the shares of Titagarh Rail Systems, implying an upside potential of nearly 27% from the previous closing price of Rs 639.35 apiece on NSE. This values Titagarh’s core business at 25x March 28E EPS and the upcoming wheel JV at 2.5x investment value. “We believe valuation multiples are justified relative to those of industrial companies with similar EPS growth,” it said, adding that the key risks to its estimates include limited wagon business visibility post-exhaustion of current OB, weak execution and entry of Chinese players into passenger coaches.

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Titagarh Rail Systems shares rallied around 11% to Rs 712.95 apiece on Tuesday. The stock has jumped around 22% in the past one week, although it is down 20% in 2026 so far. In the longer term, the shares of the company rallied 143% in three years, and a whopping 1,331% in five years.

Jefferies on Jupiter Wagon

The international brokerage however initiated coverage on Jupiter Wagon with an ‘Underperform’ rating, and a target price of Rs 200 apiece, implying a downside potential of more than 22% from the stock’s previous closing price of Rs 258.22 apiece on NSE.

With valuations at 40x FY27E PE, similar to Titagarh, Jefferies finds Jupiter too expensive for the growth differential. “We estimate 23% FY25-30E EPS CAGR for Jupiter (vs 43% CAGR for Titagarh) given JWL's higher exposure to wagons,” it said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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