I-direct Instinct - Ramkrishna Forgings - ICICI Direct

Ramkrishna Forgings (RKF) is a Kolkata based forging company, incorporated in 1981. It has six manufacturing plants in India concentrated around Jamshedpur and Kolkata with installed capacity of 1,87,100 tonnes as on date.

- FY21 mix: Domestic 55%; Exports 45% (North America: 33%; Europe: 8%)
- FY21 segment mix: auto ~89%; non-auto ~11%

RKF reported a healthy performance in Q3FY22.

- Consolidated sales rose 4% QoQ to Rs. 601.3 crore, volumes at 29,520 tonne

- EBITDA was at Rs. 141.2 crore with margins up 90 bps QoQ to 23.5%.

- Consolidated PAT was up 3% sequentially to Rs. 45.3 crore

- Management guided for strong sales growth momentum over FY22-24E

Key triggers for future price performance

- Largely EV immune product portfolio (engine components <1%) along with cyclical upswing in CV space, we build FY21-24E sales CAGR at 33.4%

- With real-time pass-through of raw material costs in the domestic space & quarterly lag in case of exports, we see margins stabilising at ~22% mark

- New order wins of >Rs. 600 crore in the recent past with annual incremental sales seen at ~Rs. 300-400 crore starting FY23-24E

- Focus on deleveraging b/s with target of being net debt free by FY25E

- Healthy double digit return-ratio profile amid stable 20%+ margin profile, increasing share of exports & greater machining in sales mix, going forward

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Link to the report

Source : Equity Bulls

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