Titagarh Rail Systems: A Strong Performer with Mixed Indicators

Titagarh Rail Systems, a midcap company in the railway industry, has recently been downgraded to a 'Hold' by MarketsMOJO on December 4, 2023. This decision was based on the company's healthy long-term growth, with an annual operating profit growth rate of 28.70%. In fact, the company has declared positive results for the last five consecutive quarters, with a 70.96% growth in operating profit in September 2023.
One of the key factors contributing to the company's positive performance is its high operating profit to interest ratio of 5.68 times. Additionally, the company's net sales have grown by 54.08% to Rs 935.45 crore, and its PBDIT has reached a high of Rs 115.09 crore. These numbers indicate a strong financial position for Titagarh Rail Systems.

From a technical standpoint, the stock is currently in a bullish range and has shown a 2.06% return since December 5, 2023. Multiple technical indicators, such as MACD, Bollinger Band, KST, and OBV, also suggest a bullish trend for the stock.

Institutional investors hold a significant stake of 27.31% in the company, indicating their confidence in its fundamentals. In fact, their stake has increased by 10.57% in the previous quarter. Titagarh Rail Systems has also consistently outperformed the BSE 500 index in the last three annual periods, with a return of 387.29% in the last year alone.

However, the company's high debt to EBITDA ratio of 6.23 times raises concerns about its ability to service debt. This is further supported by a low return on equity of 2.99%, indicating low profitability per unit of shareholders' funds. Additionally, with a ROCE of 23.1, the stock is currently trading at a very expensive valuation with an enterprise value to capital employed ratio of 8.2.

Despite its strong performance and consistent returns, the stock is currently trading at a discount compared to its historical valuations. While it has generated a return of 387.29% in the last year, its profits have only increased by 443.8%, resulting in a low PEG ratio of 0.2. Overall, MarketsMOJO's downgrade to 'Hold' for Titagarh Rail Systems is based on a neutral and informative analysis of the company's financials and technical indicators.