Texmaco Rail & Engineering shares soar on healthy Q2 FY24 earnings

Learn Team
October 16, 2023

Railways and engineering companies stock has been on fire over the past year as government as well as private companies have increased their capital expenditures, witnessing demand. The government has focused on connectivity, lowering time and cost, and pushing India toward a manufacturing hub.

Texmaco Rail & Engineering Ltd., a leading freight car manufacturer serving as the largest supplier of wagons to the Indian Railways, recently declared its quarterly results. The company's major operating divisions include the heavy engineering division, which focuses on wagon, hydro-mechanical equipment, and process equipment manufacturing facilities, and the steel foundry division. They have five manufacturing facilities in Kolkata and marketing offices in Mumbai, Chennai, and Delhi.

According to the latest quarterly release, the company has reclassified its segment report during the current quarter to appropriately represent the strategic realignment of its business operations. The Board has considered and approved the demerger of its "Infra-Rail & Green Energy'' division into "M/s. Belgharia Engineering Udyog Private Limited," a wholly owned subsidiary.

For the second quarter of FY24, the company reported a 22% increase in consolidated net income. Year-on-year income for the quarter under observation increased by 66% to Rs. 805 crore. The company reported an EBITDA of Rs. 76 crore, indicating a YoY increase of 76.74%. While the EBITDA margin remained steady on a YoY basis at 9%, it showed a 600 basis point improvement sequentially.

All segments of the company, including heavy engineering and steel foundry, exhibited strong revenue growth during the quarter. Revenue from heavy engineering saw a jump of two times in revenue to Rs. 616 crore from Rs. 192 crore in the comparable quarter. Whereas, revenue from the steel foundry rose by 60%, from Rs. 123 crore to Rs. 202 crore, compared to the previous year. Revenue from rail and green energy (Infra) reached Rs.123 crore, while electrical (Infra) contributed Rs.32.23 crore.

Back in mid-September, the board of directors of the company approved plan to raise funds up to Rs 1,000 crore by way of issuance of equity shares through qualified institution placement (QIP) and right issue. The funding plan was to infuse fresh capital into the company and also shape Texmaco Rail's expansion plans and future growth potential.

Company stock, following the result announcement, made a gap-up opening and is currently trading in green at Rs. 141.

Particulars	Sep-23	Jun-23	Mar-23	Dec-22	Sep-22
	(Rs. in Cr.)	(Rs. in Cr.)	(Rs. in Cr.)	(Rs. in Cr.)	(Rs. in Cr.)
Total Income from operations (net)	805.05	656.82	835.27	624.89	484.42
Total Expenses	737.59	647.39	788.88	577.77	449.81
Profit from operations before other income, finance costs and exceptional items	67.45	9.43	46.39	47.12	34.61
Other Income	5.36	35.73	8.02	4.29	10.24
Profit from ordinary activities before finance costs and exceptional items	72.81	45.17	54.41	51.41	44.85
Finance Costs	36.62	34.53	31.45	31.85	30.43
Profit from ordinary activities before tax	36.19	10.64	22.96	19.56	14.42
Total Tax	15.99	2.1	8	10.52	2.54
Share of Profits / Loss of Associated Companies After Tax	4.39	4.15	3.32	3.71	3.5
Net Profit after taxes, minority interest and share of Profit/(Loss) of associates	24.65	12.75	18.33	12.81	15.44

Key Ratios

Particulars	Mar-23	Mar-22	Mar-21	Mar-20	Mar-19
Debt-Equity Ratio	0.62	0.6	0.71	0.62	0.5
Long Term Debt-Equity Ratio	0.08	0.04	0.05	0.05	0.04
Current Ratio	1.69	1.68	1.48	1.51	1.52
Fixed Assets	4.26	3.2	3.02	3.54	4.09
Inventory	5.01	5.41	3.99	3.71	5.02
Debtors	3.84	3.07	2.69	2.51	2.49
Interest Cover Ratio	1.18	1.26	1.03	1.49	2.22
ROCE (%)	5.89	6.01	5.28	7.37	8.86
RONW (%)	0.85	0.99	0.33	6.69	6.59