Titagarh Rail Systems (TITAGARH) Q4 13/14 earnings summary

Executive summary

• FY14 performance weakened sharply as delayed Indian Railways wagon orders, deferred coach designs and weak private-sector demand cut production, sales and profitability.

• Standalone PAT fell to Rs 375.94 lakh from Rs 2,387.81 lakh; consolidated accounts recorded a loss attributable to shareholders of Rs 893.26 lakh.

• Strategy focused on diversification, efficiency and working-capital management; production of EMU coaches began and a reduced Indian Railways wagon order was received in April 2014.

Financial highlights

• Standalone net revenue was Rs 26,123.92 lakh vs Rs 49,935.21 lakh; EBITDA was Rs 1,890.31 lakh vs Rs 5,898.95 lakh.

• Standalone PBT was Rs 597.01 lakh vs Rs 3,734.28 lakh; PAT was Rs 375.94 lakh vs Rs 2,387.81 lakh.

• Consolidated net revenue was Rs 62,411.82 lakh vs Rs 78,234.63 lakh; EBITDA before exceptional items was Rs 3,652.76 lakh.

• Consolidated loss attributable to shareholders was Rs 893.26 lakh vs profit of Rs 2,358.15 lakh; EPS was negative Rs 4.45 vs Rs 11.76.

• Standalone operating cash flow was Rs 2,422.86 lakh vs an outflow of Rs 1,180.49 lakh; closing cash equivalents were Rs 2,180.75 lakh.

Outlook and guidance

• Indian Railways released a reduced wagon order in April 2014; wagon margins remained stressed, with near-term segment performance expected to depend more on coach deliveries.

• Production began on EMU coaches; 12 MEMU and 11 EMU rakes under orders valued at ~Rs 250 crore were expected to be delivered to agreed schedules.

• FY15 Railway Budget outlay was Rs 64,305 crore; higher rail freight demand and dedicated freight corridors were identified as potential wagon-industry catalysts.

• Priorities included expanding Coaches, Castings, HEMM and special projects, improving asset use and productivity, reducing costs, strengthening working capital and pursuing export markets.

• A Kolkata Metro coach-refurbishment contract was viewed as an entry point for future metro-coach manufacturing; shipbuilding fabrication opportunities were also under consideration.