Railway stock: Morgan Stanley downgrades Titagarh Rail Systems to Equal-weight, trims target by Rs 246

According to Morgan Stanley, while freight remains the key near-term earnings driver for the company, the backlog of around 9,047 wagons provides visibility only till H1 FY27. It added that fresh order inflows are crucial for sustaining growth.

The brokerage has also cut Titagarh Rail Systems’ margin estimates for FY26–FY28 due to fixed-cost under-absorption. It has trimmed freight EBIT margins by 95–135 basis points.

However, passenger segment orders, including Mumbai Metro and Vande Bharat, remain healthy, with execution seen as the key monitorable, it said.

Morgan Stanley has reduced its target price on the stock by Rs 246 to Rs 771 from Rs 1,017 as it has downgraded the counter to an Equal-weight rating. The revised target price is just 2 per cent below Friday’s closing level of Rs 785.

Notably, the stock of the private railway company has underperformed the markets significantly over the last two years. The stock has corrected 39 per cent in the past one year and 25 per cent over two years, compared with a 7.2 per cent and 18.9 per cent rise in the BSE Sensex, respectively, during the same period.

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