IDBI Capital upgrades Texmaco Rail to ‘accumulate’

Texmaco Rail and Engineering (TXMRE) results were better than expected and largely supported by higher other income. Revenue fell 4.2% to Rs1.4 bn impacted by fall in wagon delivery with IR orders being exhausted. EBIDTA margin stood at 5.7%, down 1030 bps YoY. PAT was down 46% to Rs89 mn impacted by the fall in volume and higher expenses. The UGL JV received order for 135 Loco bogies during the quarter.

Start of operations from UGL facility is a positive as it already provides lease income of ~Rs100 mn annually. Indian Railway (IR) regular or ad-hoc orders have not been released and remain a concern. We still maintain our 1,625 wagons execution for FY14 assuming IR ad-hoc orders and Concor orders. Post a significant correction in the stock price since our last update, we upgrade the stock to ACCUMULATE with a target price of Rs38 based on 10x our FY15E EPS.

Texmaco Rail & Engineering Limited (Texmaco), a ISO: 9001-2008, an Industry for Industries founded its Heavy Engineering and Steel Foundry businesses in the year 1939 by renowned industrialist, Late Dr. K.K.Birla. The Engineering and Steel Foundry Divisions of Texmaco Limited were transferred to Texmaco, with the parent company retaining the businesses of Real Estate, Mini Hydel Power and Investments. The demerger has been done as per the decision of the Board in the FY 2010, to unlock the value of the shareholders in both the companies and enable them to focus on their core business strengths and grow independently of each other.

Texmaco is now a proud member of ADVENTZ Group, comprising renowned blue chip companies, headed by the Group Chairman Mr. Saroj Poddar. The Group has been launched with the idea of one virtual company with many real businesses. It is based on four fundamental principles – Collaboration, Sustainability, Inclusiveness and being Global.

With 5 manufacturing units extending over 170 acres, Texmaco is one of the leading Mechanical and Structural Engineering Companies in India, located in the suburbs of Kolkata.

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