Titagarh Rail Systems Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Titagarh Rail Systems reported a mixed Q3 FY26, with strong growth in its Passenger Rail Systems segment, evidenced by a significant revenue and EBITDA jump. However, the Freight Rail Systems segment saw muted revenue due to persistent wheel set supply chain challenges. The company made strategic progress with a new wagon leasing license and the completion of its shipbuilding business demerger, while also advancing its backward integration and capacity expansion plans for passenger coaches, with key projects expected to complete in H1 FY27.

Highlights

  • Passenger Rail Systems revenue grew from INR40 crores to INR160 crores in Q3 FY26, reflecting a significant jump.

  • Passenger Rail Systems EBITDA increased from less than INR5 crores to about INR22 crores in Q3 FY26.

  • The company produced 18 metro cars in Q3 FY26, a substantial increase from approximately 3 metro cars in the prior Q3.

  • A wagon leasing license was secured, which will strengthen the company's presence in the private sector wagon market and enable entry into wagon maintenance.

  • The demerger of the shipbuilding business was completed, and an order for a Coastal Research Vessel was received, with the business expected to pick up well.

Concerns

  • Freight Rail Systems revenue was muted year-on-year, declining from INR800 crores to around INR600 crores in Q3 FY26, primarily due to wheel set supply chain issues.

  • Production of aluminium metro coaches for Pune and Mumbai projects is not expected to commence until Q3 FY27.

Key financials

3 periods

Headline

  • Freight Rail Systems Revenue
    ₹600 Cr
    YoY -25%
  • Passenger Rail Systems Revenue
    ₹160 Cr
    YoY +300%
  • Passenger Rail Systems EBITDA
    ₹22 Cr

Q3 FY26

  • Metro Cars Produced
    18 cars
    YoY +500%

9M FY26

  • Metro Cars Produced
    39 cars

What they filed

Q1 FY27: revenue up 12.7%, net profit up 71.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,057 902 1,006 679 799 −24%832 −8%875 −13%765 +13%
EBITDA125 94 18 64 74 −41%91 −3%92 +411%94 +47%
Net profit81 63 -124 31 37 −54%45 −29%54 +144%53 +71%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹760 Cr Total
  • Freight Rail Systems ₹600 Cr 78.9%
  • Passenger Rail Systems ₹160 Cr 21.1%

Order book

high confidence

Total value

₹27,755 Cr

as of 2025-12-31 quantified

Execution

Existing orders for freight business can cater for H1 next financial year.

Composition

Mix 2 products
  • Propulsion ₹500 Cr 11.1%
  • Metros (Mumbai Line 5 & 6) ₹4,000 Cr 88.9%

Share of order book by product, derived from disclosed amounts

Pipeline

qualified rfp

Participating in a spate of tenders for passenger rail systems.

The order book provides visibility for the freight business into H1 FY27 and shows significant growth in the passenger segment, with new orders and tenders expected to further bolster both segments.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹1,000 Cr equity raise, internal accruals, and debt
    • Passenger Rail Systems capacity and production
    • Aluminium metro line establishment
    • Backward integration for car body components
    • 1.6 km test track
    The overall capex that we had announced for the Passenger Rail Systems to achieve the capacity or the production that we have projected right now was about INR1,000 crores. And the capex that we are envisaging to make within FY'27 is within that amount. Part of it was funded through the equity raise that we had done and the internal accruals, and part of it through the funding, through the debt.
  • M&A Shipbuilding Business Divestment · Closed

    Demerger completed to focus on core rail systems business.

    Now a 100% subsidiary, business is picking up well.

    The demerger of the shipbuilding business has been completed, and we have we had already announced the order that we received for the Coastal Research Vessel. But that business is picking up very well, and we expect that although it's a 100% subsidiary now, but that business is going to pick up very well, and there is a lot of tailwind available in that business.
  • M&A Titagarh Firema (Italian entity) Divestment · Pending regulatory

    Unsuccessful in Europe, company made losses; decided not to take further exposure. Italian State Railways offered to buy out.

    Worst-case scenario/losses disclosed in results, mostly non-cash, no impact on Indian business. Not expecting large equity payback.

    The second one was to produce in Europe for Europe. That unfortunately could not succeed and the company continued to make losses. And considering the opportunities available in India and the difficulties prevalent in Europe, we had decided not to take further exposure. And therefore, now the company the Italian State Railways have made an offer to buy out that company, and that is a deal which is under progress.

Guidance & targets

Capacity

  • Metro Car Production Capacity · FY26 · Medium confidence 100-120 cars
    Now let me explain this to you that the target that we had set for ourselves this quarter this year was between 100 to 120 cars. And there is a significant improvement that we have made, as you have already noted. And we may not be able to get to 100 or 120, but we'll be pretty close to that, which in itself will be a very can I request to go on mute, please, because I'm listening to myself. Yes. There will be a significant improvement that we will see in the Q4.

    — Umesh Chowdhary

Production Start

  • Pune Aluminium Metro Coach Production Production Start · FY27 · High confidence Q3 or Q4 of next financial year
    As far as the Pune is concerned, Pune is an aluminium metro coach. And as I mentioned that the production of that will start only after completion of the project or the line that we are setting up for the aluminium coach, which will be somewhere in Q3 of this the car body production will start in Q3 or Q4 of this financial year of the coming financial year.

    — Umesh Chowdhary

  • Joint Venture Wheel Sets Trial Production Production Start · March/April 2026 · High confidence Starts
    Yes. The trial production is expected to start by March or April and then stabilize in another couple of quarters.

    — Umesh Chowdhary

Production Completion

  • Vande Bharat Car Bodies (first rake) Production Completion · March 2026 (end of FY26) · High confidence 16 cars
    And Vande Bharat production has already started. We expect by the end of this financial year, that is March 2026, to be able to complete the car bodies of the first rake, which is 16 cars.

    — Umesh Chowdhary

Readiness

  • First Vande Bharat Train Readiness · Q3 FY27 · High confidence Ready
    And the first train is likely to be ready in the Q3 of this financial of the coming financial year, I'm sorry.

    — Umesh Chowdhary

Execution Start

  • Mumbai Metro Execution Start · Q3 FY27 · High confidence Execution starts
    And Mumbai will start execution from Q3 of the next financial year.

    — Umesh Chowdhary

Production Rate

  • Metro Car Production Run Rate Production Rate · within next few months · Medium confidence 20 cars per month
    Our target is to get to 20 cars per month, which is what we will get within the next few months.

    — Umesh Chowdhary

Margin

  • Passenger Business EBITDA Margin Margin · couple of financial years · Medium confidence 15%
    So our ultimate target on the passenger side is to be able to get to about 15% EBITDA levels, which will take us, maybe another couple of financial years to get there.

    — Umesh Chowdhary

Completion

  • Aluminium Metro Line Establishment Completion · Q2 FY27 · High confidence Completed
    The last but not the least is that the aluminium metro line is being established. The project is already on way, and we should be able to complete it by Q2 of FY'27.

    — Umesh Chowdhary

Order Inflow

  • Freight Wagon Tenders Order Inflow · Q1 FY27 · Medium confidence New tenders
    This is not in our hands, but we are expecting it to come in Q1, as I said in the beginning that the railway had set its target of carrying 3 billion tons of traffic.

    — Umesh Chowdhary

Market Share

  • Railways Logistics Market Share Market Share · by 2030 · High confidence 40%
    The vision that the Prime Minister said in the national rail plan, 40% market share will be in logistics.

    — Umesh Chowdhary

What to watch in Q4 FY26

Metro Car Production (Q4 FY26)

Next quarter (Q4 FY26 results)
Current 39 cars in 9M FY26, 18 cars in Q3 FY26
Target Achieve 'pretty close' to 100-120 cars for FY26

Why it matters

Indicates execution capability and ramp-up of the high-growth passenger business segment.

And we may not be able to get to 100 or 120, but we'll be pretty close to that, which in itself will be a very can I request to go on mute, please, because I'm listening to myself. Yes. There will be a significant improvement that we will see in the Q4.

Risks & concerns

  • Freight Rail Systems Wheel Set Supply Chain Issues

    medium

    Revenue for Freight Rail Systems was muted in Q3 FY26 due to wheel set problems, though the issue has normalized and internal JV production is expected to resolve it in the coming quarters.

    Management acknowledged

  • Italian Joint Venture Losses and Divestment

    low

    The European operations of the Titagarh Firema JV incurred losses, leading to a decision to divest. Management stated the worst-case scenario is disclosed and it will not impact Indian business.

    Management contained

Q&A highlights

5 direct
Metro Car Production Target for FY26 Partial
And we may not be able to get to 100 or 120, but we'll be pretty close to that, which in itself will be a very can I request to go on mute, please, because I'm listening to myself. Yes. There will be a significant improvement that we will see in the Q4.

Analyst questioned the achievability of the 100-120 metro cars target for FY26 given 39 cars in 9 months, and management provided a qualified positive outlook for Q4.

Asked by Balasubramanian

Wagon Leasing Business Strategy and Financials Direct
So this is a business which will be a part of our existing company itself. And we are looking at this as expanding our offering to the customer. Primary business would continue to remain sale of or offering of wagons. This is only an enabler to increase our market share in the private sector wagon business.

Analyst sought details on the new wagon leasing business, including fleet size, yield, and capital structure, to which management clarified its strategic role as an enabler within the existing business.

Asked by Balasubramanian

Defence Business Opportunities and Titagarh Naval Systems Listing Partial
As far as the defence is concerned, we have already announced that this is something which is under evaluation of a Board committee. And we will then, at an appropriate stage, once the Board has decided on the way forward, we would definitely announce that to the market. And for the Titagarh Naval Systems, also we had already I had already mentioned in the interactions over media and otherwise, we are going to build this business. And yes, the idea would be to separately list this company at an appropriate stage.

Analyst inquired about the opportunity size in defence and plans for listing Titagarh Naval Systems, receiving a response that decisions are pending Board evaluation and listing would occur at an 'appropriate stage'.

Asked by Balasubramanian

Commissioning of New Component Facilities and Backward Integration Direct
So it is already going on, sir, both the expansion in terms of the aluminium that I mentioned, the backward integration for all the car body components and also the test track, which is going to be a big game changer for us, even for our ambitions to get into the high speed or the bullet train segment, the 1.6 kilometre test track. So all of that work is going on at full pace, and we expect all of these projects to be completed in the first half of the next financial year.

Analyst asked for timelines on new component facilities and backward integration, receiving a clear timeline for completion in H1 FY27, indicating progress on strategic initiatives.

Asked by Aniket Madhwani

Status of Titagarh Firema Joint Venture and Financial Impact Direct
The second one was to produce in Europe for Europe. That unfortunately could not succeed and the company continued to make losses. And considering the opportunities available in India and the difficulties prevalent in Europe, we had decided not to take further exposure. And therefore, now the company the Italian State Railways have made an offer to buy out that company, and that is a deal which is under progress.

Analyst sought clarification on the status and financial implications of the Titagarh Firema JV, revealing the ongoing buyout by Italian State Railways and management's assurance of no impact on Indian operations.

Asked by Viren Sameer Deshpande

Government Wagon Tenders and Budget Impact Direct
This is not in our hands, but we are expecting it to come in Q1, as I said in the beginning that the railway had set its target of carrying 3 billion tons of traffic. The railway has not done any downgrade anywhere in that. The railway is still determined that it will carry 3 billion tons of traffic by 2030.

Analyst pressed for timelines on government wagon tenders and the budget's impact, with management indicating expectations for Q1 FY27 tenders based on long-term railway targets.

Asked by Rajesh Bhandari

Top Line Growth and Margins for Next 2 Years Direct
The margin freight wagon margins remain stable at 11%, 12%, 12.5% like we have always done. And as far as the passenger business is concerned, again, because of the scales, we have always maintained that once we achieve the basic economies of scale, we should be at about 11%, 12%, which is what we are at this quarter. And going forward, once we have our own propulsion, and we are able to fully backward integrate, which is a process that should take us another 2 years or so, we will be able to enhance that margin by additional maybe 3%, 4%. So our ultimate target on the passenger side is to be able to get to about 15% EBITDA levels, which will take us, maybe another couple of financial years to get there.

Analyst asked for a comprehensive outlook on top-line growth and margins for both freight and passenger segments over the next two years, receiving specific margin targets and strategic drivers.

Asked by Devang Shah

FY27 Capex Allocation and MRVC Tender Capex Partial
The overall capex that we had announced for the Passenger Rail Systems to achieve the capacity or the production that we have projected right now was about INR1,000 crores. And the capex that we are envisaging to make within FY'27 is within that amount. Part of it was funded through the equity raise that we had done and the internal accruals, and part of it through the funding, through the debt. So there is no new capital requirement per se that will be there, apart from the further expansions if we take up. So if there are, for example, the expansions for opportunities like high-speed or MRVCs or some other additional large projects that come up, that may take up new capex requirements. But outside that, the current levels that we have, the current orders that we have will be catered to by the capex that was already announced, which is underway and will be completed in the first half of FY'27.

Analyst inquired about the FY27 capex plan and potential additional capex for new projects like MRVC, to which management clarified the existing INR1,000 crores plan covers current orders and new capex would only be for further expansions.

Asked by Devanshi Shah

4 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Titagarh Rail Systems reported a mixed Q3 FY26. The Freight Rail Systems segment experienced muted revenue, declining from INR800 crores to approximately INR600 crores year-on-year, primarily due to persistent wheel set supply chain issues. In contrast, the Passenger Rail Systems segment demonstrated robust growth, with revenue surging from INR40 crores to INR160 crores and EBITDA increasing from less than INR5 crores to about INR22 crores. Management highlighted the passenger business as the 'silver lining' for the quarter, indicating its growing importance.

Passenger Rail Systems Expansion and Integration

The company is aggressively expanding its passenger rail capabilities, having flagged off the first Ahmedabad Metro train and commenced series production. The first propulsion set for EMU has received RDSO approval, backed by an order book of approximately INR500 crores, with revenue expected from FY27. Strategic agreements, including one with ABB for 750 kVA and 25 kVA TCMS technology transfer, will enable in-house production of critical components like traction motors and converters. Furthermore, the establishment of an aluminium metro line, anticipated by Q2 FY27, will facilitate backward integration for end-to-end manufacturing of aluminium metro and high-speed train coaches.

Freight Rail Systems & Supply Chain Resilience

The Freight Rail Systems business faced headwinds from type-wise mismatches and supply disruptions of wheel sets, impacting overall industry production. While the issue has seen some normalization, the company has resorted to importing wheel sets for private wagons to mitigate lost production. A long-term solution is underway with trial production from their joint venture for wheel sets expected by March 2026, aiming for full internal availability within a couple of quarters. The company maintains a capacity to produce 1,000 wagons per month and anticipates new government tenders in Q1 FY27, aligning with the railways' ambitious target of 3 billion tons of freight by 2030.

New Business Ventures and Strategic Divestments

Titagarh Rail Systems secured a wagon leasing license, a strategic move to enhance its presence in the private sector wagon market and enter the wagon maintenance segment. The demerger of the shipbuilding business has been successfully completed, and the company has already received an order for a Coastal Research Vessel, with this subsidiary business showing promising growth. The defence business remains under evaluation by a Board committee, with future announcements expected upon final decisions. The company also confirmed the ongoing process for the Italian State Railways to buy out its loss-making Titagarh Firema JV, ensuring no further exposure or impact on Indian operations.

Order Book and Execution Outlook

The company's total order book stands at approximately INR27,755 crores. The passenger segment alone accounts for a significant portion, with INR11,000 crores directly and an additional INR7,000 crores indirectly through a JV with BHEL. Recent wins include INR4,000 crores for Mumbai Metro Line 5 & 6 in the last six months. For FY26, the company produced 39 metro cars in 9 months and expects to be 'pretty close' to its aspirational target of 100-120 cars, with a significant ramp-up in Q4. The backlog for CRRC Bangalore Metro is projected to be cleared mostly by FY27, potentially spilling into early FY28.

Margin Profile and Capital Expenditure Plans

Freight wagon margins remained stable at 11-12.5%. For the passenger business, current margins are 11-12% at basic economies of scale. Management aims to achieve an ultimate EBITDA margin of 15% for the passenger segment within a couple of financial years, driven by in-house propulsion and full backward integration. The overall capex for Passenger Rail Systems, targeting projected capacity, is approximately INR1,000 crores. FY27 capex will fall within this amount, funded by a mix of equity, internal accruals, and debt, with no new capital required for existing projects, as key infrastructure is expected to be completed in H1 FY27.

Strategic Outlook and Government Support

Management expressed strong optimism for FY27 and FY28, anticipating these years to be 'very important' and 'exciting' for the Passenger Rail Systems due to planned production ramp-ups. They also hope for continued growth in the Freight Rail Systems business, supported by new railway orders in H1 FY27. The Union Budget was viewed positively, with its focus on new Vande Bharat trains and high-speed corridors aligning well with Titagarh's capabilities as a self-reliant manufacturer, reinforcing the company's long-term growth trajectory.

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