Titagarh Wagons revving up on D-Street as Italian subsidiary gets equity infusion of Euro 20 million

The stock opened 4.8% higher on September 12 over its previous close on the back of the recapitalisation of Titagarh Firema. 

Titagarh Wagon announced on September 11 that the Government of Italy, through its investment arm – Invitalia has taken a strategic stake in Titagarh Firema Spa (TFA), the subsidiary of the company. The size of the equity infusion is Euro 10 million for a 30.30% stake in Titagarh Firema. 

With this strategic transaction, the total equity infusion is around Euro 20 million, of which Hawk Eye DMCC, a Private Equity Fund based out of UAE has invested Euro 4.5 million and acquired 13.64% equity share capital of the company. 

The existing promoters of the company and shareholders (Titagarh Bridges & International Pvt Ltd) have also invested Euro 5.4 million as a part of the investment agreement and recapitalisation plan agreed by TFA with the Government agency and the Private Equity fund. The new equity has been issued at face value of Euro 1 per share translating into an Enterprise Value of the company at Euro 118 million and an Equity valuation of Euro 33 million. 

The recapitalisation plan has been undertaken to strengthen the Italian company to achieve its targeted profitable growth. This investment will allow TFA to expand its business and achieve its target of reaching a production of 20 EMU coaches per month and developing into a boutique and high-quality Italian coach producer for Italy and Europe. 

TFA was acquired by Titagarh Wagon in 2015. However, with this equity infusion, TFA would cease to be a subsidiary of Titagarh Wagons. The company along with its subsidiary Titagarh Bridges & International Private Limited (TBIPL) continues to hold shares worth Euro 16.40 million representing 49.70% of TFA. 

Also noteworthy, Titagarh Wagons recently bagged the single largest contract from the Indian railways for the manufacture and supply of 24,177 wagons to the Indian Railways worth Rs 7,843 crore and have already started the execution of this contract. The total order book of Titagarh Wagons stands at an impressive Rs 10,050 crore which is 6.8 times the revenue generated in FY 22. 

At 2.40 pm, shares of Titagarh wagon were quoting at Rs 161, with a gain of 2.68% or Rs 4.20.