Stocks To Buy: The one key trigger that can take this railway stock higher by 36%

Shares of Titagarh Rail Systems Ltd. rose close to 5% on Tuesday, June 1, as Nuvama Institutional Equities reiterated its 'Buy' rating on the stock and marginally raised its price target as well.

In its latest note dated June 1, the brokerage firm raised its price target on the wagons manufacturer to ₹1,089 from ₹1,061, implying an upside of nearly 36% from Monday's closing price of ₹801.45.

According to Nuvama, signs of improvement are emerging in the company's passenger rail business despite a weak March quarter, impacted by lower wagon production and a shrinking freight order book.

Titagarh Rail reported a 14% year-on-year decline in fourth-quarter revenue to ₹860 crore

, while adjusted profit after tax fell 53% to ₹60.8 crore as wagon execution remained under pressure. However, passenger coach execution continued to improve, with the company delivering 24 coaches during the quarter compared with six a year earlier.

Nuvama noted that revenue from the passenger segment nearly doubled YoY to ₹170 crore in the March quarter, while segment EBIT margin expanded to 18.8% from 10.4% a year ago. Freight segment revenue, however, declined 25% YoY as wagon production remained constrained by a lower order book and intermittent wheelset availability.

The brokerage said Titagarh's order book remains healthy at about ₹14,200 crore, equivalent to a book-to-bill ratio of 4.5 times. Of the executable order book, around ₹10,600 crore relates to passenger coaches, ₹3,100 crore to freight wagons, while the remainder is linked to shipbuilding and defence businesses.

The company also has long-term joint venture orders worth ₹13,300 crore, including forged wheel and Vande Bharat maintenance contracts.
According to the brokerage, the key trigger for the stock will be fresh wagon tenders from Indian Railways. Titagarh's existing wagon order book is expected to last only until the third quarter of FY27, making new order inflows critical for sustaining production levels.

Management remains optimistic about growth in the passenger business. The company expects to deliver the prototype Vande Bharat train by the second half of FY27 and sees metro coach deliveries for Mumbai Metro beginning later this fiscal year. Production at its wheelset joint venture with Ramkrishna Forgings is also expected to commence from June 2026.

While Nuvama cut its FY27 earnings estimate by 14% and FY28 estimate by 3% to reflect slower wagon ordering, it maintained a constructive long-term view on the company, citing strong opportunities across passenger rolling stock, metro rail and Vande Bharat projects. The brokerage values the stock at 35 times FY28 estimated earnings.

Titagarh Rail is a near-consensus buy recommendation among the 12 analysts who track it, as 11 of them have a "buy" rating. The other one has a "hold" recommendation with no "sell" ratings. The consensus estimates of price targets implies an upside potential of 24% from current levels.