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Titagarh Rail Systems has received a big order from the Railways. There has been a decline in the shares of the company for quite some time. But after this order, a rise in shares may be seen on Thursday. Shares of Titagarh Rail Systems closed down on Wednesday.
New Delhi. An important news has emerged for those investing in companies related to the railway sector. Titagarh Rail Systems Limited has received a big order worth Rs 273.24 crore from Indian Railways. After receiving this order, the company has once again come on the radar of investors and further sharp movements in its shares are expected. Any big contract related to railways gives a strong indication of the company’s credibility and future earnings in the market. This is the reason why after this deal it is being advised to keep a special eye on the shares of Titagarh Rail Systems.
The company has got this contract for design, manufacturing, supply, testing and commissioning of Rail Borne Maintenance Vehicles i.e. RBMV. Apart from this, the company will provide training to railway employees and will also provide servicing and breakdown maintenance support. RBMV is a self-propelled on-track machine, which is used for monitoring, maintenance and repair of railway tracks and infrastructure. This strengthens both railway safety and operational efficiency.
Why is this deal important for the company
According to Titagarh Rail Systems, this order is the first major entry in its safety and signaling system segment. This segment is considered high value and technology based, where margins are also likely to be better. Market experts believe that this order will strengthen both the order book and revenue visibility of the company. Its effect may also be visible in the company’s results in the coming quarters.
What are the signals from the stock point of view
The government’s focus on railways and infrastructure sector is continuously increasing. In such a situation, the companies which have railway orders are expected to get benefits in the long term. Titagarh Rail Systems is already active in wagon and coach manufacturing and now its entry into safety systems has further strengthened its growth profile. If the company delivers the project on time and continues to receive such orders, then the stock may see good returns in the medium to long term. Shares of Titagarh closed at Rs 774.55 with a decline of 1.93 per cent on NSE today. This stock has given a return of 2.15 percent in the last 5 days. Whereas this stock has fallen by 12 percent in 1 month. This stock has fallen 30 percent so far this year. In the last one year, it has caused a loss of 40 percent to its investors. Whereas, if we talk about long term, this stock has given more than 65 percent return in 5 years.
What lessons for investors
This order gives positive indications for the company’s business diversification and future earnings. However, before investing, it is important to keep an eye on the financials, valuation and market movements of the company. Overall, this big order received from Railways can write the story of possible huge profits in the shares of Titagarh Rail Systems.
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