Titagarh Wagons Limited Q4 FY23 Earnings Conference Call Insights

Key highlights from Titagarh Wagons Limited (TWL) Q4 FY23 Earnings Concall

 Q&A Highlights:

• [00:15:50] Kaushik Mohan from Ashika Stock Broking asked about the Vande Bharat order. Umesh Chowdhary MD said that the Vande Bharat contract has two portions; supply and maintenance. The total contract value, including maintenance, is about INR 24,000 crores plus PVC, with TWL’s share being about 51-52%.

• [00:18:36] Balasubramanian of Arihant Capital asked about the status of trial in propulsion systems for railways and the margin improvement expected. Umesh Chowdhary MD replied that the approval process for the propulsion system is underway and some components are under trial. TWL expects margin improvements once they start making their own indigenous propulsion system, which will take 2-3 years. The current low EBITDA is due to the lower top line.

• [00:24:45] Balasubramanian of Arihant Capital enquired about the monthly run rate and future target for the volume of traction motors. Umesh Chowdhary MD said that the stored capacity for traction motors is between 1,800-2,400 per year. The approval process is time-taking and some motors have already undergone successful trials.

• [00:26:05] Balasubramanian of Arihant Capital asked for information on the pipeline for the metro side and the status of Surat and Aurangabad metros. Umesh Chowdhary MD replied that the metro business is attractive with many upcoming opportunities. TWL has established themselves as a significant player in the field as the only fully Atmanirbhar Indian metro coach manufacturer and plan to continue being a significant player in the future.

• [00:27:20] Vinay Chowdhary enquired how many private sector wagons were produced in FY23 and what is the planned production for FY24. Umesh Chowdhary MD clarified that TWL does not give a breakdown between private sector and RFP wagons but stated that TWL is a leader in both segments with a large order book in the private sector wagon market and are the leaders in the railway wagon market.

• [00:29:49] Lemar Shah asked about the total wagon production for 4Q23. Umesh Chowdhary MD said TWL has achieved an average run rate of around 8,000 wagons or 2,000 wagons per quarter and aims to grow it further to reach close to 3,000 wagons per quarter in the current financial year.

• [00:32:12] Lemar Shah asked what percentage of the total contract is pending to be executed in Pune Metro and when it will be completed. Umesh Chowdhary MD answered that about 50% of the contract was completed until the last financial year and the remaining will be completed within the current year.

• [00:41:41] Kaushik Mohit from Ashika Stock asked about the contract value for Pune and the time to finish the 50%. Umesh Chowdhary MD replied that the total contract for Pune Metro was for 34 trains with a value of about INR1,100 crores. 50% has been executed and the balance will be completed within FY24.

• [00:44:29] Kaushik Mohit from Ashika Stock enquired about the capex for next 3-4 years. Umesh Chowdhary MD answered that the CapEx to be incurred over the next 4-5 years is about INR1,000 crores, including INR 250-300 crores spent in the last 2-3 years. This includes the equity portion for the wheel project.

• [00:45:55] Abdul Quadir asked about the demand in the private sector for wagons and the number of wagons delivered during 4Q23. Umesh Chowdhary MD replied that private demand has picked up well in the last year. TWL is a leading player in the private rail wagon business with one of the highest order books in both the private sector and railway business. And on delivery, on a QbyQ basis is not disclosed, but the run rate achieved is close to 2,000 wagons per quarter.

• [00:48:19] Aakash Vohra at Dalal and Broacha asked if the capex be from internal accruals or more debt and what is the broader strategy on debt. Umesh Chowdhary MD said the company has reduced its debt significantly over the last 5 years while incurring capex and enhancing capacities. The funding of the capex will be a judicious mix of internal accruals and debt, with a conservative debt policy.