Jefferies initiates coverage on 2 rail stocks, says Titagarh can rally 32%

Jefferies has initiated coverage on two rail rolling stock makers with contrasting calls, betting on a sharp re-rating in Titagarh Rail Systems while turning cautious on Jupiter Wagons.

The brokerage has started coverage on Titagarh Rail with a Buy rating and a price target of Rs 810, implying a 32% potential upside from the previous close of Rs 615. In the same report, it initiated coverage on Jupiter Wagons with an Underperform rating and a target price of Rs 200, signalling a 22% potential downside from Rs 257.

Jefferies expects India’s rolling stock capital expenditure to grow at a 10% compound annual rate over FY26–30, broadly in line with the 12% CAGR seen in FY20–26.


“We estimate a 10% FY26-30E CAGR in Indian Railways (IR) rolling stock spending, led by a 16% CAGR in passenger coach spending and a 9% CAGR in locomotive spending, offset by weak wagon growth,” Jefferies said. It sees the mix shifting in favour of passenger and metro coaches as the rail network modernises and urban transit expands.

The bull case for Titagarh

On Titagarh, Jefferies argues that the company is poised to be a key beneficiary of this pivot towards passenger and metro coaches.

“We believe Titagarh will be a key beneficiary of rising passenger and metro coach demand,” the brokerage said, estimating a 35% revenue CAGR and a 43% EPS CAGR over FY26–30, driven by a 14x rise in passenger rail systems revenues and margin improvement as it moves up the technology value chain.

The passenger rail systems order book of Rs 108 billion — at “42x FY25 PRS sales” — provides strong visibility, with the share of passenger revenues projected to rise from 7% in FY25 to 63% by FY28.

Jefferies’ Rs 810 target values Titagarh’s core business at 25 times March 2028 estimated earnings and its upcoming wheel joint venture at 2.5 times investment value.

“Our Rs 810 PT (32% potential upside) values Titagarh’s core business at 25x Mar’28E EPS to reflect strong growth,” the report noted, adding that return on equity is expected to “double from 6% in FY26E to 13% by FY28E and 16% by FY30E” as plant utilisation rises.

Key risks flagged include limited wagon business visibility once the current order book is exhausted, execution challenges, and the possible entry of Chinese players in passenger coaches.

Why Jefferies is bearish on Jupiter Wagons

In contrast, Jefferies believes growth at Jupiter Wagons will slow as its business remains heavily skewed towards lower-growth freight.

The brokerage estimates a 23% EPS CAGR for Jupiter over FY26–30, well below Titagarh’s 43%, as wagons are expected to account for 60% or more of sales even by FY28. The new wheel manufacturing plant is also expected to contribute meaningfully only post FY28.

“With valuations at 40x FY27E PE, similar to Titagarh, we find Jupiter too expensive for the growth differential,” Jefferies said, assigning an Underperform rating and a Rs 200 target. This values the core business at 20 times March 2028 EPS and the wheel plant at 3.5 times book value.

Overall, Jefferies’ view is that India’s rail capex cycle remains intact, but investors should “prefer Titagarh” given its stronger earnings trajectory, improving return ratios, and greater exposure to structurally faster-growing passenger and metro segments.