Titagarh Wagons Ltd (TWL) - Intial Public Offer (ipo)
Titagarh Wagons Ltd (TWL)
Initial Public Offer
Key Data
Date of Opening 24th March, 2008
Date of Closing 27th March, 2008
Method of Payment Full bid amount at the time of submission
Value @ Rs 540-610 Rs128.72-145.40 Crore
No. of Share Offered 2383768 equity shares
Face Value 10
BRLM’S Kotak Mhindra Capital Company Ltd
Registrar Karvy Computershare Pvt Ltd
Minimum Lot 10 equity shares
Maximum Retail Lot 16 (160 Shares Rs97600/- at Rs.610/- per share)
Post Issue Share Capital 17.08 Crore
Post Issue Market - cap. 922.25-1041.80 Crore.
Investment Rationale
Titagarh Wagons Ltd. (TWL) is a private sector wagon manufacturer in India. primarily engaged in the business of manufacturing railway wagons, Bailey bridges, Heavy Earth Moving and Mining equipment, steel and SG iron castings of moderate to complex configuration etc. We recommend investors to subscribe the issue at cut-off price.
TWL has a strong track record in terms of projects delivery and also has an advantage of support of experienced promoters with long standing industry experience. TWL has been registered with Directorate General of Quality Assurance (DGQA) as an approved manufacturer of Bailey Bridges thus enabling it to capitalize the opportunities available in this segment. On obtaining the Uttarapara unit the company has entered into backward integration which is likely to improve the operational efficiency and thus lead to improvements in margins thereafter. The issue seems to be an attractive investment having a strong future growth.
In a Superior position to capitalize opportunity available in Bailey Bridge segment
TWL is registered with Directorate General of Quality Assurance (DGQA) to manufacture Bailey Bridges and other related accessories in India and has the manufacturing capacity of 72 bridges per annum. Since the competition in this segment is limited, TWL is placed in a good position to capitalize opportunities available in this segment. Further to strengthen its modular steel bridge business, TWL has entered into a MOU with Kawada Industries Inc. for development of double lane modular bridges. This technology will increase the application of modular bridges thereby opening up new business opportunity for the company.
Entrance into vital components through backward integration
TWL has acquired the Uttarpara unit and the steel foundry at the unit has been certified as a Class “A” foundry by the RDSO. Thus TWL has been certified as an approved source for manufacturing bogies and couplers. Thus the company has started using the steel foundry for the manufacturing of bogies and couplers for in-house consumption. This has ensured continued access to vital components for manufacturing wagons. On an average the cost of procurement of bogies and couplers is 14-17 percent of the total selling price of a wagon to the Non-Indian Railway customers. Thus going forward we believe TWL’s in-house production capabilities will help it to maintain access to such critical components at competitive prices.
Follows an Innovative approach
TWL has developed the design of wheel on wheels (WoW) wagons which are specially designed to carry various types of trucks plying on the Indian roads catering to the needs of the logistic industry by providing Roll-on-Roll-off service. Its design of the WoW is under consideration by the Research and Development Standard Organization (RDSO). Further, it has also developed a special wagon for carrying automobiles named the COR (“Cars on Rail”) wagon. The wagons are a double deck wagons designed as per Indian railway standards and are suitable for transporting cars. These wagons are capable to run on the entire Indian railway system including under electrified routes. It has submitted the design for evaluation to the RDSO and also applied for patent for the design. In addition, it continuously endeavors to innovate and develop better management and production techniques which help to improve its overall efficiencies.
Intends to diversify globally and optimize the product mix
The company intends to explore relationships with suppliers and customers in developing markets. Recently TWL exported wagons to Africa. Further with the advantage of backward integration the company intends to set up an axle machining and wheelset assembly shop to achieve a higher level of operational continuity.
Positive outlook for the industry to benefit TWL
As per the Railway Budget 2008-09, incremental loading expected for FY07 was about 600 lakh tones. The freight loading for FY08 has been pegged at 850 Million tonnes and by the terminal year of 11th five year plan the railways are targeting a freight loading of 1100 lakh tonnes. In order to achieve this target the railways are targeting to focus their investments in the freight segment and the wagon manufacturing industry. The market structure the industry enjoys is very much oligopoly which has shifted from monopoly. Here there are few sellers and few buyers hence the demand is actually showing a very elastic approach. The price change of one player will actually affect the price of other players and hence makes it more volatile as the approach of all the players is very much towards huge profit maximization. Now as the Indian Railways has started focusing on the private sector with the help of the above mentioned schemes and companies like Titagarh Wagons Ltd will definitely benefit more.
For In-depth Titagarh Wagons Ltd (TWL) ipo research report, company profile along with Titagarh Wagons Ltd stock recommendations, Titagarh Wagons Ltd target price and for making informed investment decisions Click Here.
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1102, Stock Exchange Tower, Dalal Street, Mumbai 400 001
Phone: 91-22-56338050 / 66965555. Fax: 5633 8060
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