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    Texmaco Rail

    TEXRAILGood
    Capital Goods·3 Feb 2025
    Management Summary

    Texmaco Rail reported stable Q3 FY25 performance with robust growth in freight car deliveries, despite a slight sequential dip attributed to temporary wheelset unavailability. The company announced strategic corporate restructuring initiatives, including a merger and business transfers, aimed at enhancing operational efficiency. Management expressed confidence in future growth, supported by a healthy order book, strategic capacity expansions, and a diversified market approach, including a foray into passenger mobility components.

    Highlights

    8
    • Q3 FY25 Revenue stood at INR1,326 crores.

    • Q3 FY25 EBITDA was INR139 crores, achieving a 10.5% margin.

    • Q3 FY25 PAT reached INR76 crores, with a 5.8% margin.

    • 9M FY25 Revenue was INR3,766 crores, with EBITDA of INR411 crores (nearly 11% margin) and PAT of INR210 crores (5.6% margin).

    • Freight car deliveries in Q3 FY25 grew 54.6% YoY to 2,714 units, and 9M FY25 deliveries increased 70% YoY to 8,015 units.

    • The merger of Texmaco West Rail with Texmaco Rail & Engineering was approved, expected to complete in 6-8 months.

    • Infra-Rail and Green Energy businesses are being transferred to a 100% subsidiary, projected to take 12-15 months.

    • Long-term bank facilities were upgraded to CARE A, and short-term facilities to CARE A1.

    Concerns

    1
    • Non-availability of wheelsets from Indian Railways (Rail Wheel Factory).

    What Changed2

    vs Q4 FY25

    Guidance items12 → 7 (-5)Risks discussed4 → 3 (-1)
    Key financials

    Metrics

    17

    Periods

    3

    Headline

    5
    • Revenue
      ₹1,326 Cr
    • EBITDA
      ₹139 Cr
    • EBITDA Margin
      10.5%
    • PAT
      ₹76 Cr
    • PAT Margin
      5.8%

    Q3

    6
    • Freight Cars Delivered
      2,714 units
      YoY+54.6%
    • Jindal Rail Turnover
      ₹265 Cr
    • Jindal Rail PBT
      ₹35.72 Cr
    • Other Expense
      ₹35.98 Cr
      QoQ+33.3%
    • Finance Cost
      ₹32.93 Cr

    9M

    6
    • Revenue
      ₹3,766 Cr
    • EBITDA
      ₹411 Cr
    • EBITDA Margin
      11%
    • PAT
      ₹210 Cr
    • PAT Margin
      5.6%

    Segment breakdown

    Jindal Rail (acquired)
    526 Q3 Wagons Delivered1,417 9M Wagons Delivered₹692 Cr 9M Turnover₹98.45 Cr 9M PBT
    Freight Car Division
    ₹11.85 Cr EBITDA
    Electrical Division
    ₹2,000 Cr Order Book
    List

    Guidance & targets

    7
    CategoryTargetPriority
    Corporate Restructuring
    Texmaco West Rail merger completion
    6-8 months
    High
    Corporate Restructuring
    Infra-Rail and Green Energy transfer to subsidiary
    12-15 months
    High
    Capacity Expansion
    Odisha steel foundry operational
    middle of next year
    High
    Supply Chain
    Permission to use imported wheelsets
    Until April 2026
    High
    Volume
    Wagon production
    More than FY25
    Medium
    Revenue
    Overall company growth
    very good
    Medium
    Revenue/Profitability
    Q4 FY25 performance
    At least at par or better than Q3
    Medium

    Risks & concerns

    5
    RiskSeverity

    Non-availability of wheelsets from Indian Railways (Rail Wheel Factory).

    Caused Q3 FY25 performance to be slightly lower than Q2 FY25, but mitigated by permission to import until April 2026.Management acknowledged

    high

    Flat budget allocation for railways in FY26.

    Analyst concern about potential impact on order inflows, but management stated no cut in overall rolling stock budget and highlighted long-term plan and private sector boost.Analyst downplayed

    medium

    Global dynamics and geopolitical situation.

    Potential unknown impact on business, especially exports, but mitigated by diversified customer base and increasing supply in almost all continents.Management acknowledged

    medium

    Areas of Evasion(2)

    • Specific numerical guidance for future consolidated revenue/profitability
    • Reiterating past guidance for specific metrics

    Q&A highlights

    3

    “So the heartening fact to us, being part of the ecosystem and one of the major stakeholders or a leading stakeholder is, there is no cut in that budget, and it is still in and around INR46,000 crores so far the railway estimation goes and as per information available to us.”

    Addresses investor concerns about potential slowdown in government spending and clarifies management's perspective on the long-term railway growth plan.

    asked by Garvit Goyal

    3 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Performance and 9M Highlights

    Texmaco Rail reported a Q3 FY25 revenue of INR1,326 crores, with an EBITDA of INR139 crores, translating to a 10.5% margin. PAT stood at INR76 crores, achieving a 5.8% margin. For the first nine months of FY25, revenue reached INR3,766 crores, with EBITDA at INR411 crores (nearly 11% margin) and PAT at INR210 crores (5.6% margin). The company delivered 2,714 freight cars in Q3, marking a 54.6% YoY growth, and 8,015 freight cars for 9M FY25, a 70% YoY increase, demonstrating strong execution despite operational challenges.

    02

    Strategic Corporate Restructuring and Credit Rating Upgrade

    The Board approved the merger of Texmaco West Rail Limited (formerly Jindal Rail Infrastructure) with Texmaco Rail & Engineering, an exercise expected to conclude within 6-8 months. Additionally, the Infra-Rail and Green Energy EPC businesses are slated for transfer to a 100% subsidiary via a slump exchange, a process anticipated to take 12-15 months. Management emphasized continuing these businesses for profitable growth. The company's financial strength was recognized with an upgrade of its long-term bank facilities to CARE A and short-term facilities to CARE A1.

    03

    Capacity Expansion and Supply Chain Mitigation

    The company's steel foundry, currently operating at 48,000 metric tons with approximately 90% captive consumption, is undergoing expansion in Odisha. This new facility is expected to be operational by mid-next year, boosting total finished casting capacity to 80,000 metric tons, targeting both domestic and overseas markets. To address the Q3 wheelset shortage, which caused a slight sequential dip in performance, the railway has permitted the use of imported wheelsets for private wagon manufacturing until April 2026, primarily sourced from China.

    04

    Order Book and Market Outlook

    Texmaco Rail holds a robust order book of approximately INR7,600 crores, which includes over 11,000 wagon orders and more than INR2,000 crores in the electrical division. The company noted that 2,679 private wagons were delivered in 9 months, representing about 25% of the total, with railways accounting for 75%. Management expressed confidence in continued order inflows, citing the government's consistent rolling stock allocation of around INR46,000 crores and growing private sector investment in infrastructure, mining, and logistics.

    05

    Diversification into Passenger Mobility and Exports

    The company is strategically entering the passenger mobility segment, having acquired an interior company and secured orders for Vande Bharat sleeper interiors. While not currently manufacturing entire coaches, they are exploring opportunities. In exports, particularly for castings, management sees strong demand from US railroads due for renewals and is gearing up for better numbers, leveraging its global presence and cost-effectiveness to mitigate geopolitical risks and capitalize on potential tariff shifts.

    06

    Cost Management and Financial Performance Drivers

    Finance costs for Q3 FY25 were INR32.93 crores, marginally up from INR32 crores last year, primarily due to increased interest costs of INR21.2 crores (vs INR18.48 crores in Q2) following the Jindal Rail acquisition. Other expenses also saw a sequential increase from INR27 crores to INR35.98 crores, attributed to initiatives for future growth. Management reiterated its focus on operational efficiencies and cost control across various components of the business to drive future improvements.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.