Jefferies Issues Contrasting Views on Two Railway Stocks, Sees 32% Upside Potential in One and Downside Risk in the Other

Indian Railways' Rolling Stock Capex Drives Strong Growth

Global brokerage Jefferies has initiated coverage on railway stocks Titagarh and Jupiter Wagons, assigning 'Buy' and 'Underperform' ratings, respectively. While both stocks trade at 40 times price to earnings (PE), Jefferies finds Jupiter Wagons too expensive for the growth differential.

The global brokerage sees strong growth in the Indian Railways' rolling stock capex, with a 10% FY26-30E compound annual growth rate (CAGR) in sectoral spending. This growth is led by a 16% CAGR in passenger coach spending, vs 7% in FY20-26E, with a focus on safety, modernization, and Vande Bharat trainsets. Additionally, a 9% CAGR in locomotive spending is expected, led by heavy haul for new freight corridors.

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Jefferies estimates that new high-speed rail (HSR) corridors will provide growth visibility beyond FY30E as domestic trains can be 25-30% cheaper to procure. However, potential Vande Bharat trainset exports are an upside risk. Furthermore, India's Metro rail network is expected to aid demand, with the metro network expanding 4x in FY14-25 to ~1,000 km. Jefferies projects that the metro network could double to 2,000 km by FY33E, driven by urbanisation and a strong project pipeline.

Titagarh Rail Systems: A Key Beneficiary

Against this backdrop, Jefferies believes that Titagarh Rail Systems will be a key beneficiary of rising passenger and metro coach demand. The brokerage estimates 35% revenue and a 43% earnings per share (EPS) CAGR in FY26-30, led by a 14x rise in its passenger segment revenues over FY26E-30E. Titagarh's strong order book lends visibility, and ~1.4ppt margin improvement in the passenger segment is expected as it moves up the technology value chain.

Jefferies has a target price of ₹810 for Titagarh, suggesting a 32% upside from the last closing price of ₹615. The global brokerage believes that valuation multiples are justified relative to those of industrial companies with similar EPS growth. Key risks for Titagarh include limited wagon business visibility post-exhaustion of the current order book, weak execution, and entry of Chinese players into passenger coaches.

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Shares of Titagarh Rail Systems have ended 19% down in 2025, snapping their 5-year winning run. So far in 2026, the railway stock is down 28%, recording losses in the first three months of the year.

Jupiter Wagons: Too Expensive

As for Jupiter Wagons, Jefferies estimates a 23% FY25-30E EPS CAGR for Jupiter as against 43% CAGR for Titagarh, given its higher exposure to wagons. However, the global brokerage finds Jupiter too expensive for the growth differential, with valuations at 40x FY27E PE, similar to Titagarh. Jefferies has a target price of ₹200 for Jupiter, valuing its core business (ex-Wheel) at 20x Mar'28E EPS and its wheel manufacturing JV at 3.5x price to book value (P/BV).

Like Titagarh, Jupiter Wagons, too, recorded its first annual loss in six years in 2025, ending 2025 with a 32% loss. In the first few months of 2026, it is already down 24%.