Texmaco Rail & Engineering Completes Acquisition of Jindal Rail Infrastructure Limited

Kolkata, September 3, 2024: Texmaco Rail & Engineering Limited (BSE: 533326; NSE: TEXRAIL), a leading manufacturer of freight wagons and provider of railway infrastructure in India, has successfully completed the acquisition of Jindal Rail & Infrastructure Limited (JRIL). This strategic acquisition, which was initially announced on July 25, 2024, marks a significant milestone for Texmaco as it strengthens its position in the railway manufacturing industry.

The acquisition involved the purchase of 100 percent of the share capital of JRIL from its existing security holders, JITF Urban Infrastructure Services Limited and Siddeshwari Tradex Private Limited, for a final cash consideration of Rs. 614 crores. This valuation reflects an 8.1x FY 2024 EV/EBITDA multiple, underlining the transaction’s strategic importance for Texmaco.

Strategic Expansion and Enhanced Capabilities

With JRIL now a wholly owned subsidiary, Texmaco gains access to JRIL’s advanced R&D, design, and manufacturing capabilities, particularly in commodity-specific freight wagons. This acquisition significantly bolsters Texmaco’s international product portfolio and enhances its ability to meet the growing demand for new design rolling stock, particularly from the private sector.

JRIL’s Impressive Track Record

Since its inception in 2012, JRIL has delivered over 8,600 wagons to both Indian and international customers, establishing itself as a key player in the industry. Its manufacturing facility in Vadodara, Gujarat, spans over 123 acres, with half of the land currently utilized. This facility not only meets the technical and pre-qualification criteria for major wagon tenders but also has the capacity to scale production further. In FY 2024, JRIL produced over 1,650 wagons and has a robust order book of over 2,000 wagons, expected to be delivered in the next 12 to 14 months. The company reported total revenues of Rs. 750.11 crores, an EBITDA of Rs. 84.88 crores, and a profit before tax of Rs. 57.37 crores for the fiscal year.

Rationale and Strategic Benefits

The acquisition of JRIL provides Texmaco with several strategic advantages

1. G-105 Certification: JRIL’s focus on commodity-specific special purpose wagons, primarily for the private sector, positions Texmaco to expand its offerings to Indian Railways.
2. Enhanced Production: Texmaco’s technical expertise is expected to enhance JRIL’s wagon production capabilities with minimal capital expenditure.
3. Expansion Opportunities: JRIL’s surplus 60+ acres of land in Vadodara offers significant opportunities for rapid expansion and flexible manufacturing, including the development of passenger and freight wagons as well as a components ecosystem.
4. Vertical Integration: Texmaco’s foundry expertise is set to drive future vertical integration at JRIL, further enhancing production efficiency.
5. Cost Savings: The acquisition is expected to unlock major cost savings through bulk material purchases for both Texmaco and JRIL.
6. Enhanced EBITDA Margins: The consolidated entity is expected to benefit from increased private sector freight car orders, driving higher EBITDA margins.
7. Strengthened National Presence: The acquisition strategically expands Texmaco’s presence into Western India, further solidifying its national footprint.

This acquisition marks a pivotal step in Texmaco’s journey to expand its strategic capabilities and market presence, positioning the company for sustained growth and innovation in the railway manufacturing industry.

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