IPO Analysis: Titagarh Wagons

25 Mar

Posted by Shyam as Market News, IPO Watch

Titagarh Wagons, the private sector wagon manufacturer is hitting the capital markets with it proposed IPO of 24 lakh equity shares with a face value of Rs 10 each.The issues dates are from March 24-27th,2008.The issue represent 12.9% of the post IPO paid up equity capital of the company.

The price band has been kept at Rs 540-610. At the lower end of the issue price the company would generate Rs 129 crores and at the upper end Rs 15 crores. It is one among the very few wagon manufacturer in the country. And there was a good news from the Indian Railways(IR) due to increasing investment in this sector.

Indian Railways,NTPC, Concor are few of its customers.It has two manufacturing units in Titagrah and Uttarpara which has a capacity of producing 20 wagons a day. The company is on a growth pahase tragectory with a CAGR of 36% in Fy 03-07.Its profit aftr tax(PAT) witnessed a CAGR of 69% in the same period.

For the first six months ending Sept 07,its sales and PAT stood at 45% and 88% respectively.The company is fairly valued at this price levels and has a good growth prospects.So the investors can subscribe the issue at cut-off price.

The proceedings from the IPO are expected to be utilised in setting up an Electric Multiple Unit(EMU) manufacturing facility and expand its existing wagon facility,setting up axle machining facility,construction of a corporate office,brand building,acquistions etc.

Very recently on Mar 13th,2008 the Private equity(PE) group Blackstone bought a stake in the company at Rs 672 which is almost 10% over the upper end price band.

All though the present market situation does not favour a IPO and we have already seen a few IPOs backing out,this offer looks attractive.Meanwhile it is being said that the markets have almost bottomed out but in the short term it may remain jittery.I shall bring about another interesting news on this aspect soon.So keep watching this place for more.

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