From ₹40 to ₹150: This railway stock surges 275% in less than 8 months

Shares of Texmaco Rail and Engineering Limited rallied 12% in intraday trade on Monday, in an otherwise subdued broader market, as investors cheered the second quarter results of railway wagons, coaches, and locomotives manufacturer. The smallcap stock has a stellar run in the calendar year 2023, with its share price rising as much as 275% in nearly eight months from its 52-week low of ₹40.49 on March 29, 2023, to ₹150 intraday today. The railway stock touched its 52-week high of ₹163.85 on September 11, 2023, thanks to its healthy order book position and stable industry outlook for the wagon industry.

Extending its gaining streak for the second straight session, Texmaco Rail shares opened 11.3% higher at ₹149 against the previous closing price of ₹133.85 on the BSE. The stock gained as much as 12% to touch an intraday high of ₹150 amid strong volume, with nearly 6 lakh shares changing hands over the counter as compared to a two-week average volume of 1.37 lakh scrips. At the time of reporting, the stock was quoting at ₹141.60, up 5.8%, while the market capitalisation stood at ₹4,557.68 crore.

In the last two sessions, the stock has gained as much as 19%, while it added nearly 13% in a week. In the calendar year 2023, Texmaco Rail shares delivered 144% returns to its shareholders, while it surged 191% in the past 12 months. The counter climbed 208% in the past six months, while it added over 3% in a month.

Texmaco Rail and Engineering released its earnings report on October 14, which showed that its consolidated net profit jumped 66% to ₹24.64 crore as compared to ₹15.43 crore in the same period last year. Sequentially, the profit rose 22.5% from ₹12.75 crore in the June quarter of 2023.

For Q2 FY24, revenue from operations surged 66.32% to ₹805 crore as against ₹484 crore in the year-ago-period.

On the operational front, the company’s EBITDA stood at ₹76 crore, registering a year-on-year (YoY) growth of 76.74%. The EBITDA margin was steady on a YoY basis at 9%, while it increased by 600 basis points sequentially.

For the first half of the current fiscal (H1FY24), Texmaco Rail posted revenue of ₹1,462 crore, up 86% as compared to ₹783 crore in the same period last year. The company registered consolidated net profit for H1FY24 at ₹37.28 crore as against a net loss of ₹5.22 crore in H1FY23.

Segment-wise, the heavy engineering division was the best performer, with the gross revenue from this division rising over three-fold to ₹616 crore from ₹192 crore in Q2FY23. While revenue from the steel foundry was at ₹202 crore versus ₹123 crore in the previous year, rail and green energy (Infra) and electrical (Infra) posted revenues of ₹123 crore and ₹32.23 crore, respectively.

Texmaco Rail and Engineering, primarily engaged in the business of manufacturing railway wagons, coaches, and locomotives, is a part of Saroj Kumar Poddar faction of the K. K. Birla group, under the Adventz Group. Adventz is an established business group in the country having interests in fertilisers, chemicals, financial services, real estate, and sugar. It has a long presence in railway wagon manufacturing and has gradually diversified into commodity specific wagons for private parties, electric locomotive shells and sub-assemblies supplied to private parties.

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