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Monday, November 3, 2008

Titagarh Wagons: Buy

Titagarh Wagons: Buy


The relative stability of business opportunities in the rail sector makes a strong case for investing in this company.

Investments with a two-three year perspective can be considered in Titagarh Wagons (TWL), a leading private sector wagon manufacturer.

From a long-term perspective, the recent meltdown in the broad markets has rendered the company’s valuations quite attractive.

At the current market price of Rs 399, the stock now trades at about 10 times its likely FY09 per share earnings, down significantly from the PE multiple (of 17 times) it enjoyed at the time of its initial public offering in March this year. That there has been no significant mark down in capex, by either the IR or leading container rail logistics players such as Concor and Gateway Distriparks (GDL) in the interim period, suggests that there may be sufficient room for expansion in its price-earnings multiple from the current levels.

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