Railway stock to SELL: Morgan Stanley cuts target—Do you own it?

Railway stock to SELL: Shares of Titagarh Rail Systems climbed more than 3 per cent in intraday trade on Monday, defying a downgrade and a sharp target price cut by global brokerage Morgan Stanley.

The railway stock touched an intraday high of Rs 807.80. At the time of writing this report, Titagarh Rail Systems shares were trading at Rs 805.35, up Rs 20.35, or 2.59 per cent for the day. The company’s market capitalisation stood at about Rs 10,840 crore.

Morgan Stanley flags weak order visibility

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Morgan Stanley downgraded Titagarh Rail Systems to an ‘Equal-weight’ rating and cut its target price sharply by Rs 246 to Rs 771 from Rs 1,017.

The brokerage cited weak freight order inflows and limited visibility on the company’s order backlog as key reasons for the downgrade. It said subdued ordering in the freight wagon segment could continue to impact earnings visibility in the medium term.

Recent order win offers some support

The stock’s gains came despite the cautious brokerage view, supported partly by a recent order win from the Ministry of Railways. Last week, Titagarh Rail Systems received a letter of acceptance for a rail maintenance project involving 62 Rail Borne Maintenance Vehicles.

The contract is valued at Rs 273.24 crore. As of late 2025, the company’s order book stood at around Rs 28,000 to Rs 29,000 crore.

Sharp fall in Q2 FY26 earnings

Titagarh Rail Systems reported a weak financial performance for the September 2025 quarter. Consolidated net profit declined by more than 50 per cent year-on-year to Rs 36.9 crore, compared with Rs 80.69 crore in Q2 of the previous year.

Revenue from operations fell 24 per cent year-on-year to Rs 799 crore during the quarter, reflecting slower execution and softer demand.

Stock underperforms the market

The stock remains well below its 52-week high of Rs 1,330, though above its 52-week low of Rs 654.55. Titagarh Rail Systems shares have underperformed the broader market over the past two years.

The stock has corrected 39 per cent over the past one year and 25 per cent over the last two years. In comparison, the BSE Sensex has gained 7 per cent and 18 per cent over the same periods, respectively.

About the company

Titagarh Rail Systems is a leading Indian manufacturer of railway rolling stock, including freight wagons, passenger coaches, and metro trains.