Shares of Titagarh Rail Systems rallied as much as 10 percent on Wednesday to an all-time high of Rs 594 after brokerage firm HSBC initiated coverage on the stock with a buy rating.

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HSBC has a price target of Rs 730 on Titagarh, which implies a potential upside of 35 percent from Tuesday's closing levels.

The brokerage in its note said that India's plan to put more freight on its rails provides a compelling opportunity for the freight wagon maker.

HSBC expects Titagarh's Earnings per Share (EPS) to more-than-double over the next three years, with Return on Equity (RoE) expected to be in the high teens.

Indian railways plan to increase the share of freight traffic by rail to 45 percent by 2030 from 27 percent currently, according to the Railway Ministry.

The brokerage also expects Titagarh's net profit to grow by 2.5 times between financial year 2023-2026, with an average RoE of 18 percent, along with a more diversified business.

During the March quarter, the leading manufacturer of railway wagons reported a net profit of Rs Rs 48.2 crore as compared to a net loss of Rs 24.9 crore in the year-ago period.

The company's revenue rose to Rs 974.2 crore in the fourth quarter that ended in March 2023 from Rs Rs 422.2 crore in the year-ago period.

Shares of Titagarh Rail Systems are trading 8.4 percent higher at Rs 585.60.

First Published:Jul 19, 2023 11:55 AM IST