I went through the Investor Presentation from Sep 2019 up till now and read through the last few con calls and I have gathered the following information. It’s a long read however i have covered all the important developments in the recent 2 years.
Credit Rating
CRISIL Ratings has revised its outlook on the long-term bank facilities of Titagarh Wagons Limited (TWL) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL A-’. The short-term rating is reaffirmed at ‘CRISIL A2+
Order Book 10000 crs for India Operations. 8000 cr from Indian Railways 24177 wagons order
Delivery time is 39 months. No advance on wagon orders
TFA has a 500million euro order book
Debt
On standalone we have long-term net debt is zero. However, there is working capital utilization of about Rs. 140 Crores, this keeps on fluctuating because this is on a particular moment of time and depending upon the cycle of the execution of the contract. Typically in the beginning of the cycle of the execution the debt level goes up or the utilization of working capital goes up. so, the debt level I would say in India is pretty low on a standalone basis and on consolidate and overseas, we have a total net debt of about €80 million. (640 cr debt in Italy business, borrowing cost of 3.5%pa)
EBITDA Margins
I would maintain the same guidance that in our business and EBITDA margin of between 8% and 10%
Market Share
last several years in a row we have been having a market share of about 30%
Contract Clause
the contracts come with the price variation clause upward and downward.
Pune Metro Coaches & Metro projects
The demand for the metro coaches is very healthy in the country, the Honorable Prime Minister while inaugurating the Pune Metro had also announced that all the Tier-1 and Tier-2 cities are being planned to be connected
metro so I would say that while the orders that we have on hand is only the Pune right now the tender pipeline is strong and healthy.
FY2023 the contract will be fully executed.
All states, if you look at the Delhi metro, Chennai, Ahmedabad, Bengaluru so there are different states coming up, so Gorakhpur has been sanctioned so there would be number of them that would continue to come up.
TFA Titagarh Firema - Italy Business
As far as the earning is concerned, the order book of the company is about €500, million as of now and we expect that in 2022-2023 we should be EBITDA positive and 2023-2024 we should be able to turn net positive.
Titagarh Firema, there has been a very important development milestone that we have been able to achieve in terms of signing an agreement with the government of Italy, wherein the government of Italy would acquire a minority stake into Titagarh Firema. No there is no OFCD infusion; there will be an equity infusion which will include the equity infusion from the Government of Italy
it includes €4 million of almost like Rs. 35 Crores of onetime provision that we have done for the end of life the legacy contracts for the extra cost of films from the customer so that is the major impact from the consolidated perspective from the European Operations
The Italian railway business operates on a smaller EBITDA margin. normally the EBITDA target margin in Europe is at about 6%-7%
Italy future projects scope
Government of Italy and the European Union which entails spending €180 billion in infrastructure out of which almost €40 odd billion will come to our sector. since Titagarh Firema is a company based out of the south, recently announcements that were made by the senior government officials clearly said that the company is based out of in the south of Italy will be the bigger beneficiary of the PNRR. (The Program Of National Reconstruction And Resilience)
we have also given lien on one land of Bharatpur which is our indirect exposure to the lenders of the Italian subsidiary.
Catania Project - It is a framework contract of 54 trains and till now our company has got the execution clearance for 25 trains typically the way the market works is that the execution clearance is issued in batches based on the infrastructure progress or building of the infrastructure by the client.
it’s a Lazio region that is the region of Rome. we have got this contract for €280 odd million
Capex
We have done a capex of about close to Rs. 100 Crores which has been primarily funded out of internal accruals.
24000 wagons order, We by and large have the capacity some balancing capacity that will need to be created it is being created
Wheelsets issue?
Wheelsets has been continued to be a problem but the railways have taken necessary action because the Railway Board has to effectively deliver the wheelsets to us, we have to buy the wheelsets from them so the railway has placed some orders for importing wheelsets. we have not faced shortage of wheel sets in the recent past, the Rail Wheel factory has been able to ramp-up production. of course from time to time
Other business: Propulsion System/ Traction Motor
We have received orders and we have started the trial production. we already have orders and for that the plant approval and the trial production has already started.
As far as Vande Bharat opportunity is concerned, it is an important opportunity, I am happy to share that our company has already got an order for developing the propulsion for the Vande Bharat train a few months ago
Passenger Train design & delivery mechanism
The contracts that we have been signed recently and typically in a passenger train business, first designing and the production of the first train takes between 18 to 24 months that is one.
Bangalore Metro New Business and Future growth
An important milestone was reached by the company when we signed a contract with CRRC, which is the Chinese Railway Rolling Stock Corporation and Bangalore metro. The genesis of the contract is Bangalore metro had placed the contract on CRRC to supply 200 odd coaches but because of China CRRC not able to fulfill the Make in India condition the contract was not moving forward. We were able to step in and sign a tripartite contract to produce these coaches entirely in our plant in Titagarh. Apart from a acquiring the contract the advantage that we get is that this will also bring us into the stainless-steel coach manufacturing arena. We will be able to get the technical expertise know how from CRRC and also the credentials to be able to manufacture stainless steel coaches and this would make us as the first and only company in the passenger rolling stock to have facilities and capabilities to produce every type of passenger coach which is carbon steel as we have done in the case of EMU and MEMU, aluminum which we are doing now for the Pune project and stainless steel which we will start with Bangalore metro.
Vande Bharat Opportunity
There is a tender for 200 and there are two aluminum coach tenders for 100 each. These are very large value tenders including several complexities and challenges at the same time offering a great opportunity. so we are very carefully examining the tender. It not yet finalized, the tender is still not been closed in the sense. The tender is still open, and we will definitely share with you once the tender is closed as to what the company has finally done.
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