/** Title: Titagarh Rail Systems FY26: Passenger ramp-up, a cleaner balance sheet, and a bigger order book */

Titagarh Rail Systems FY26: Passenger ramp-up, a cleaner balance sheet, and a bigger order book

Titagarh Rail Systems ended FY26 with a clearer corporate structure, stronger cash generation, and a sharper growth narrative around passenger rolling stock. The year was also marked by a major clean-up of its Italy exposure. Management said the company has exited the loss-making Firema investment and provided for the entire investments and liabilities, with no further losses or liabilities expected.

On the operating side, the story is mixed but directionally positive. Standalone revenue from operations for FY26 was INR 3,143.58 crore, down from INR 3,747.38 crore in FY25. But the passenger rail segment expanded meaningfully, with revenue of INR 539.33 crore versus INR 255.55 crore in FY25. In the investor presentation, the company described this as the highest-ever passenger revenue and highlighted a sharp jump in passenger coach supplies.

Segment shift: Freight steady-state, passenger scaling

The company’s standalone segment mix underlines the transition. Freight Rail Systems remained the bulk of FY26 revenue at INR 2,604.25 crore, but Passenger Rail Systems rose to 17.16% of revenue at INR 539.33 crore.

Profitability at the segment level showed passenger improving faster than freight. Standalone FY26 segment EBIT was INR 317.93 crore in Freight and INR 76.95 crore in Passenger. Passenger EBIT margin improved to 14.27% in FY26 versus 8.27% in FY25 and 3.02% in FY24. Management clarified in the earnings call that one passenger contract had free-supply material, which can inflate margin percentages in periods when execution is higher.

Freight execution in FY26 was impacted by supply constraints. The investor presentation stated that wheelset and West Asia related supply chain issues affected performance, and the company reported dispatches of 7,019 wagons in FY26. In the call, management also mentioned industry-wide constraints including gas and LDO, along with delays in steel and component supplies at vendor levels.

Financial snapshot (Standalone)

Order book: Passenger-heavy, JV-led upside

Order book is the centrepiece of Titagarh’s FY27 narrative. The investor presentation disclosed:

• Standalone order book including wholly owned subsidiary: about INR 14,240 crore
• Total order book including prorate share of JVs: about INR 27,540 crore

Within the standalone order book, Passenger Rail Systems is the dominant contributor. The company also highlighted the joint venture contributions, including a forged wheel JV with Ramkrishna Forgings and a proposed Vande Bharat AMC joint venture with BHEL.

In passenger, the presentation stated that the order book as of March 31, 2026 includes 519 metro coaches, 1,280 Vande Bharat coaches, 71 propulsion sets and 571 traction motors (excluding option quantities).

Execution priorities for FY27

Freight: volume targets and new business channels

On freight, the company disclosed that pending order book as of March 31, 2026 comprises about 6,500 wagons for Indian Railways and private customers, with the entire order book scheduled for delivery in FY27.

A notable adjacent initiative is wagon leasing. Titagarh said it has obtained a wagon leasing license from Indian Railways and booked its first order from Balmer Lawrie for two rakes on a 10-year operating lease. In the call, management positioned leasing as an extension of product offering rather than a separate third-party leasing business.

The company also set a volume target for FY27: 650 to 700 wagons per month, with the ability to scale to 1,000 per month once new railways tenders are awarded.

Passenger: capacity expansion and delivery ramps

Passenger Rail Systems is where Titagarh is investing in capability and scale. The company acquired about 40 acres at Uttarpara to expand manufacturing capacity and build a fully integrated facility that includes a 1.6 km test track.

It also signed an agreement with ABB for TCMS for 25 kV driverless metro systems and localisation of converters and traction motors.

Management stated in the call it is confident of ramping passenger output to 200 cars in FY27. It also provided project-level updates, including:

• Pune Metro: all 34 trainsets delivered; management said defect liability period has been completed for many trainsets and the company has received an additional 12 trainsets as option quantity.
• Gujarat Metro: management expects to complete this order largely within FY27.
• Mumbai Metro: supplies expected to start in FY27 with execution over the next two financial years.
• Vande Bharat: management said the first train delivery is expected between end of Q3 and beginning of Q4 of FY27 and also stated two Vande Bharat trains will be delivered in FY27.

Capital allocation and balance sheet signals

FY26 cash flows improved significantly. The company reported standalone net cash from operating activities of INR 311.28 crore versus negative INR 101.15 crore in the prior year. Cash and cash equivalents rose to INR 151.78 crore at March 31, 2026.

The presentation also stated:

• Net debt stood at INR 93 crore
• Net working capital days were about 107 days versus about 84 days in the previous year, driven by mismatched inventory due to supply chain constraints
• Overall capex in FY26 was INR 368 crore

Alongside these operational and balance sheet updates, the board recommended a dividend of INR 1 per share for FY26, subject to shareholder approval.

The company also disclosed corporate actions including a promoter warrant issue of about INR 200 crore at INR 947 per share, with 25% already received and the balance payable within 18 months.

Subsidiaries and JVs: Naval and wheels become visible levers

Titagarh Naval Systems Limited

Shipbuilding and maritime business has been hived off into a wholly owned subsidiary effective January 1, 2026. The investor presentation described a brownfield shipyard capex plan of about INR 600 crore. It also stated that the subsidiary secured INR 169 crore under the Shipbuilding Financial Assistance Scheme.

Management said the goal is to pursue shipbuilding without disturbing the rail systems business and that the separate structure can also enable strategic financial investors at the subsidiary level.

Rail wheel JV with Ramkrishna Forgings

The forged wheel JV is positioned as a structural capability build. The company disclosed:

• 49% stake in the JV
• Capacity plan of 228,000 forged wheels per annum
• Project cost of about INR 2,000 crore funded through debt and equity
• Equity infused in the JV: INR 500 crore by both parties as of March 31, 2026
• Cold commissioning completed; hot trials and product samples expected in Q1 FY27
• Commercial operations expected to commence in Q2 FY27

Closing takeaways

Titagarh Rail Systems exits FY26 with three clear signals. First, it has attempted to close a major overhang by exiting Firema and taking the provisioning hit upfront. Second, the passenger rail business is no longer a small optional segment, with FY26 revenue at INR 539 crore and a stated target of 200 cars in FY27. Third, the order book, especially including joint ventures, provides visibility, but the next 12 to 18 months will be defined by execution and working capital control.

For investors, FY27 watchpoints are explicit in management commentary: passenger ramp-up, Vande Bharat delivery milestones, forged wheel JV commissioning, and disciplined funding of naval capex while sustaining positive operating cash flow.