LGB Forge - LGB Forge

📊 BSE: 533007 🏢 Auto Components & Equipments 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment (Forging and Machining) which generated INR 94.04 Cr in FY2024-25, representing a 5.21% YoY growth from INR 89.38 Cr in FY2023-24. Total income including other sources rose 5.28% to INR 94.75 Cr.

Geographic Revenue Split

Domestic sales dominate the revenue profile at 81% (approximately INR 76.17 Cr), while export markets contribute 9% (approximately INR 8.46 Cr) as of fiscal 2025.

Profitability Margins

Net loss narrowed significantly by 87.6% from INR 9.87 Cr in FY2023-24 to INR 1.22 Cr in FY2024-25. Operating margins turned positive to 2.3% in FY2025 from a loss of 1.09% in FY2024 due to softening raw material prices and cost efficiencies.

EBITDA Margin

Operating profit margin improved to 6% in Q1 FY2026 compared to a loss of 1.8% in Q1 FY2025. This 780 basis point improvement was driven by better fixed cost absorption and execution of higher-margin orders.

Capital Expenditure

Planned capital expenditure for fiscal 2026 is INR 4 Cr, to be funded through internal accruals. Additionally, the company is receiving INR 6 Cr in support from its parent LGB for the purchase and lease of secondhand press machines.

Credit Rating & Borrowing

Crisil reaffirmed 'Crisil BBB-/Stable/Crisil A3' ratings in October 2025. ICRA previously assigned 'BB+ (Stable)' and 'A4+' before withdrawing them at the company's request in February 2025. Debt levels reduced to INR 19 Cr in March 2025 from INR 29 Cr in March 2024.

⚙️ Operational Drivers

Raw Materials

Forging raw materials (primarily steel) represent the largest cost component, with cost of materials consumed at INR 43.01 Cr, accounting for 45.7% of total revenue in FY2025.

Import Sources

Not specifically disclosed in available documents, though the company caters to 85% domestic and 15% export markets, suggesting primarily domestic sourcing.

Capacity Expansion

Current capacity includes 1,080 MTPA at Coimbatore (Cold Forging) and 6,000 MTPA at Mysore (Hot Forging). Expansion includes a new plant in Chennai expected to begin operations by mid-2026 and a newly leased plant in Coimbatore to meet increased demand.

Raw Material Costs

Raw material costs rose 2.4% YoY to INR 43.01 Cr in FY2025. The company is focusing on product-mix optimization to mitigate price volatility and improve margins.

Manufacturing Efficiency

Efficiency is being driven by process improvements and refurbishment of press machines, which led to a 6% operating margin in Q1 FY2026 through better fixed cost absorption.

Logistics & Distribution

Distribution costs are expected to decrease following the planned setup of facilities closer to customer locations, which will directly improve operating margins by 5-7% over the medium term.

📈 Strategic Growth

Expected Growth Rate

17-27%

Growth Strategy

Growth will be achieved through a target revenue of INR 110-120 Cr driven by a healthy order book, the refurbishment of aging machinery to reduce downtime, and the addition of new manufacturing lines in Chennai and Coimbatore. The company is also shifting its product mix toward higher-margin orders.

Products & Services

Forged (hot, warm, and cold) and machined components for passenger vehicles (PV), commercial vehicles (CV), and tractor segments.

Brand Portfolio

LGB Forge (operating under the flagship LGB Group).

New Products/Services

Focusing on higher-margin product mixes in the forging segment; specific new product names were not disclosed.

Market Expansion

Expanding manufacturing footprint with a new facility in Chennai (operational by mid-2026) and a leased plant in Coimbatore to support customer demand.

Market Share & Ranking

Relatively small player in a highly competitive forging industry with low market share compared to larger competitors.

Strategic Alliances

Strong operational and financial linkage with parent L.G. Balakrishnan & Bros Limited (LGB), which provides managerial support and leasing of machinery.

🌍 External Factors

Industry Trends

The forging industry is currently facing a shortage of skilled labor and rising energy costs. The company is positioning itself by automating/refurbishing lines to improve fixed cost absorption as the industry shifts toward higher precision components.

Competitive Landscape

Faces intense competition from larger, more integrated forging companies which restricts pricing power and market share growth.

Competitive Moat

Moat is derived from the 'LGB' brand heritage (founded 1937) and longstanding relationships with Tier-1 auto suppliers. Sustainability is supported by the parent company's willingness to provide unsecured loans (INR 2 Cr in FY25) and lease equipment.

Macro Economic Sensitivity

Highly sensitive to the automotive cycle across PV, CV, and tractor segments; however, diversification across these three segments provides a hedge against a slump in any single category.

Consumer Behavior

Demand is driven by Tier-1 suppliers who are increasingly requiring uninterrupted supply and higher quality standards, prompting the company's current capex in new facilities.

Geopolitical Risks

Global geopolitical instability is cited as a threat that could increase input costs and disrupt the delivery of forged products.

⚖️ Regulatory & Governance

Industry Regulations

Complies with SEBI Listing Obligations and Disclosure Requirements (LODR) 2015 and the Companies Act 2013. The company maintains a 'Code of Conduct' for insider trading and fair disclosure of UPSI.

⚠️ Risk Analysis

Key Uncertainties

Machinery reliability is a key risk; historical breakdowns led to revenue dips. Financial risk is moderate with a networth of INR 18 Cr and past losses affecting capital reserves.

Geographic Concentration Risk

High concentration in Southern India with plants in Coimbatore (Tamil Nadu) and Mysore (Karnataka), and a new facility coming up in Chennai.

Third Party Dependencies

High dependency on the parent company (LGB) for financial support, machinery leasing, and managerial guidance.

Technology Obsolescence Risk

High risk due to 'very old' machinery (18+ presses) which required a major refurbishment plan to remain competitive against modern forging technologies.