Narsingh Equity - Titagarh Wagons Ltd (TWL) IPO Detailed Analysis

·The Net Income of the company has increased at a CAGR of 57% to Rs. 280.41 crore in FY March 07 from Rs. 47 crore in FY March 03. The Net income for 6 months ended September 07 stands at Rs. 207 crore.
·The Net Profit of the company has increased at a CAGR of 74% to Rs. 29 crore in FY March 07 from Rs. 3 crore in FY March 03. The Net Profit for 6 months ended September 07 stands at Rs. 24.3 crore.
·RONW of the company has improved and stood at 31% in March 07 from 20.65% in March 06 due to increase in PAT.
·The NPM of the company has improved to 10.3% in FY 07 from 6.67% in FY 05. For 6 months ended September 07, it stands at 11.48%.
·Debtors turnover ratio for March 07 stood at 8.05 times as compared to 6.7 times in March 06.
·The book value per share as on March 07 comes out to Rs. 64. For September 07, it stands at Rs. 142.
·EPS as on March 07 comes out to Rs. 20 and for 6 months ended September 07 it stands at Rs. 16.5.

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·The company Titagarh Wagons Limited (TWL) wasincorporated in July 1997.
·TWL is a private sector wagon manufacturer in India. Its operations are divided into 3 foloowing parts :-
               a) Wagon Manufacturing

               b) Special Projects (includes Defence, Bailey bridges and other fabricated equipment) &

               c) Heavy Earth Moving and Mining Equipment
·TWL operate two manufacturing facilities at Titagarh and Uttarpara, in West Bengal. The Uttarpara unit also functions as asecond manufacturing plant for wagons, in addition to manufacturing heavy earth moving and mining equipment.
·TWL acquired the Heavy Engineering Division of Hyderabad Industries Limited in April 2005. The purchase included a manufacturing unit in Uttarpara, West Bengal.This acquisition strengthened theexisting product profile as the steel castings manufactured at the steel foundry are used in wagon manufacturing.
·As an Industry Partner to the Defence Research and Development Organization (DRDO),TWL manufacture products such as special purpose wagons, shelters andother engineering equipment. As of September 30, 2007, it has supplied 105 Bailey bridges and has a manufacturing capacity of building up to 72 Bailey bridges per annum.
·TWL also entered into the field of manufacturing and marketing special purpose wagons to suit the varying needs of its customers, such as Merry-Go-Round (MGR) wagons, etc.
·TWL has specifically designed the Wheel-on-Wheels (WoW) wagon to enable it to carry various types of trucks, catering to the needs of the logistics industry by providing a Roll-on-Roll-off service. The design of its WoW wagon is currently under review by the Research and Development Standard Organisation (RDSO).
·Post issue promoter and promoter’s group shareholding will reduce to 49% from the current ownership of 57%.

·To setup an Electric Multiple Coaches (EMU) manufacturing facility and an axlemachining and wheelset assembly facility at Uttarpara unit.
·To moderniseand expand its existing facilities at Titagarh and Uttarpara units.
·To constructa corporate office and a design cum research and development office.
·For strategic acquisition or investments.
·For brand building exercise through advertising expenditure and other such programs.
·To invest in general corporate purposes.

·TWL has carved out a niche for itself by developing a special wagon for carrying automobiles named the COR (Cars onRail) wagon. The wagons are a double deck wagons designed as per Indian railway standards and are suitable for transporting cars and arecapable to run on the entire Indian railway system including under electrified routes.
·The OPM of the company has improved to 19% in FY 07from 13% in FY 05. For 6 months ended September 07, it comes out to 20%.
·Debt to Equity ratio has reduced and stood at 0.4 times in FY 07 from 0.7 times in FY 05. For September 07, it stands at 0.1 times.

·TWL’s revenues have been largely dependent on the manufacturing of wagons as itcontributed 79% of total income in FY07. The Indian Railways is one of the largest customers of TWL for wagons. Any substantial decrease in the ordersplaced by the Indian Railways or a decrease in the selling price of wagons may adversely impact company’s revenues and profitability.
·The average collection period has increased to 46days in FY 07 from 30 days in FY 05.

Company Name	EPS (in Rs.)	PE (in Times)	OPM (in %)	Net Sales (in Rs. Cr)
Titagarh Wagons (TWL)	17	NA	20	208

BEML	50	26	10	868