On the other hand, TWL may well procure incremental business from the Railways in the coming years since it is presently investing in doubling its wagon manufacturing capacity. That the capacity expansion will be funded through the IPO money raised by the company also does away with concerns regarding any high reliance on debt for expansion. The only bottleneck in this business is the limited availability of axle and wheel sets given the supply constraints of the domestic railways-approved wheel set manufacturers.This, the company plans to circumvent by setting its own axle machining and wheel set assembling plant.
TWL Financials
On a compounded annual basis, TWL has in the last four years grown its revenues and profits at 76 per cent and 97 per cent respectively.
Operating profit margins, during this period, have expanded by over 2.6 percentage points to 15.5 per cent.
Though TWL has presence in HEMM (heavy earth moving and mining equipment) and steel castings (captive consumption) businesses, we expect a bulk of its revenue growth to come from the wagon manufacturing division.
To that extent, it leaves little scope for expansion in margins and realisations as IR fixes the price of wagons on the basis of the lowest bid (L1) it receives. |
