Shares of railway companies Jupiter Wagons, Titagarh Rail Systems and Texmaco Rail & Engineering rallied as much as 10% on Monday after a report said Indian Railways is preparing to launch a mega Rs 40,000-crore tender to procure 1 lakh freight wagons over the next three to four years.
Jupiter Wagons shares soared 10% to their day’s high of Rs 304 on the BSE, while Titagarh Rail Systems rose 9% to Rs 827.50. Texmaco Rail rose over 6% to Rs 115 apiece.
According to a Mint report citing two sources, the proposed tender is expected to be slightly larger than the previous major wagon procurement exercise undertaken in 2022. The report said Indian Railways may procure around 35,000-40,000 wagons annually, with the first set of orders likely to be issued during the second quarter of the current financial year between July and September.
“The industry is completing orders under the previous Indian Railways wagon tender and fresh orders with longer visibility will allow the domestic wagon industry to function at capacity and maintain operations of their production lines,” Sudipta Mukherjee told Mint.
Mukherjee added that nearly one-third, or around 11,000 wagons, of the annual wagon procurement under the previous Railways tender was supplied by Kolkata-based Texmaco, which currently has the capacity to manufacture more than 15,000 wagons annually.
The report further said Indian Railways is currently holding discussions with manufacturers to assess their production capabilities before floating the tender, which is expected to be issued in phases.
Last month, Jefferies initiated coverage on Titagarh Rail Systems with a ‘Buy’ rating and a target price of Rs 810, a level the stock has already crossed. In the same report, the brokerage initiated coverage on Jupiter Wagons with an ‘Underperform’ rating and a target price of Rs 200, implying a potential downside of 28% from Rs 277.
On Titagarh Rail, Jefferies said the company is likely to emerge as a major beneficiary of the shift towards passenger and metro coach manufacturing. “We believe Titagarh will be a key beneficiary of rising passenger and metro coach demand,” the brokerage said, while projecting a 35% revenue CAGR and a 43% EPS CAGR over FY26-30. The growth is expected to be driven by a 14-fold increase in passenger rail systems revenue along with margin improvement as the company moves higher up the technology value chain.
The brokerage noted that Titagarh’s passenger rail systems order book stands at Rs 108 billion, equivalent to 42 times FY25 passenger rail systems sales, providing strong revenue visibility. It expects the share of passenger business revenue to rise from 7% in FY25 to 63% by FY28.
In contrast, Jefferies expects growth at Jupiter Wagons to moderate as the business remains heavily dependent on the lower-growth freight wagon segment. The brokerage estimates a 23% EPS CAGR for Jupiter Wagons over FY26-30, significantly lower than Titagarh’s projected 43%, with wagons expected to continue contributing more than 60% of overall sales even by FY28. It also said the company’s new wheel manufacturing facility is likely to make a meaningful contribution only after FY28.
“With valuations at 40x FY27E PE, similar to Titagarh, we find Jupiter too expensive for the growth differential,” Jefferies said, assigning an ‘Underperform’ rating and a Rs 200 target price. The brokerage values Jupiter’s core business at 20 times March 2028 EPS and the wheel plant at 3.5 times book value.
Overall, Jefferies believes India’s railway capital expenditure cycle remains firmly intact but said investors should prefer Titagarh Rail Systems due to its stronger earnings outlook, improving return ratios and higher exposure to structurally faster-growing passenger and metro rail segments.
