RKFORGE - Ramkrishna Forg.

📊 NSE: RKFORGE 🏢 Castings & Forgings 📅 Last Updated: 12/14/2025 11:37

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 8.9% YoY to INR 4,038.2 Cr in FY25. In Q2 FY26, standalone revenue grew 18% YoY to INR 800.79 Cr, while consolidated revenue grew 14% YoY to INR 907.53 Cr. H1 FY26 consolidated revenue reached INR 1,922.79 Cr, a 4% YoY increase.

Geographic Revenue Split

Exports contribute over 40% of total revenue, primarily to Europe and North America. Direct exports to the US are limited to 5-6% of total revenue. This geographic split exposes the company to global macroeconomic cycles and currency fluctuations.

Profitability Margins

Operating margins were restated to 14.4% for FY25 (down from 21.4% in FY24) due to a significant inventory discrepancy. H1 FY26 consolidated EBITDA margin stood at 14.1%. The company targets a long-term margin of 17-18% through a premix of casting and forging products.

EBITDA Margin

Consolidated EBITDA for H1 FY26 was INR 271.15 Cr, representing a 14.1% margin and a 19% YoY growth. Standalone EBITDA for Q2 FY26 grew 25% YoY to INR 107.89 Cr with a 13.5% margin.

Capital Expenditure

Actual consolidated capex in FY25 was INR 840 Cr, significantly higher than the planned INR 535 Cr. Planned capex for FY26 is INR 460 Cr, aimed at capacity expansion and technology upgrades.

Credit Rating & Borrowing

Crisil downgraded the long-term rating to 'Crisil AA-' from 'Crisil AA' in 2025, maintaining a 'Watch Negative' status. External borrowings rose to INR 2,013 Cr as of March 31, 2025, leading to a Net Debt to EBITDA ratio of 3.5x.

⚙️ Operational Drivers

Raw Materials

Forging quality steel and steel scrap are the primary raw materials. Costs are highly sensitive to global commodity price movements, which are directly linked to the company's top-line pricing.

Capacity Expansion

The company is establishing a railway wheel JV (Ramkrishna Titagarh Rail Wheels Limited) with a capacity of 40,000 wheels per year, targeting INR 1,600-1,700 Cr in revenue by FY28 at 80-85% utilization.

Raw Material Costs

Raw material costs are a major component of the cost structure; a restatement of INR 270.74 Cr was required in FY25 to rectify erroneous entries in material consumption and scrap accounting.

Manufacturing Efficiency

The company targets 80-85% capacity utilization for its new railway wheel JV by FY28. Manufacturing efficiency is being addressed through the implementation of stronger internal controls and SAP process streamlining.

Logistics & Distribution

Distribution costs are impacted by the high export volume (40% of revenue) to Europe and North America, making the company susceptible to global shipping rate volatility.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by the railway wheel JV (INR 1,600-1,700 Cr potential), a new focus on the defense sector, and inorganic growth from acquisitions like ACIL, Multitech Auto, and Mal Metalliks. The company is also shifting toward higher value-add products like B2C axles.

Products & Services

Forged and machined components for MHCVs, railway wheels, axles, railway wagon parts, coaches, and precision engineering components.

Brand Portfolio

Ramkrishna Forgings (RKFL), Multitech Auto, Mal Metalliks, Ramkrishna Casting Solutions.

New Products/Services

Railway wheels (40,000 units/year capacity) and value-added B2C axles are expected to be major revenue contributors by FY28.

Market Expansion

Expansion into the Mexican market via the acquisition of Ramkrishna Forgings Mexico S.A. de C.V. in August 2024 to better serve the North American automotive hub.

Market Share & Ranking

RKFL is one of the largest manufacturers of forged automotive components in India with a longstanding presence of over four decades.

Strategic Alliances

A 51:49 joint venture with Titagarh Rail Systems Limited for the manufacture of railway wheels.

🌍 External Factors

Industry Trends

The industry is shifting toward value-added machined components and green manufacturing. RKFL is positioning itself by diversifying into non-auto segments like railways and defense to mitigate auto-cyclicality.

Competitive Landscape

Operates in a competitive auto-component market but maintains a healthy position through integrated operations and economies of scale following recent acquisitions.

Competitive Moat

Moat is built on 40 years of OEM relationships, deep technical expertise in complex forgings, and high entry barriers in the railway wheel manufacturing segment.

Macro Economic Sensitivity

Highly sensitive to global macroeconomic trends, particularly in the automotive and railway sectors of Europe and North America.

Consumer Behavior

Shift toward EVs and stricter pollution norms (BS-VI) is forcing a change in product mix toward components that are powertrain-neutral.

Geopolitical Risks

Global volatility, currency movements, and trade barriers in key export markets (Europe/NA) pose significant risks to the 40% export revenue stream.

⚖️ Regulatory & Governance

Industry Regulations

Susceptible to changes in pollution norms (BS-VI), EV mandates, and labor regulations across its manufacturing facilities in Jharkhand and West Bengal.

Environmental Compliance

The company is integrating ESG into its corporate strategy and investing in green manufacturing technologies to meet evolving environmental regulations.

Taxation Policy Impact

The post-tax impact of the inventory discrepancy was INR 202.60 Cr on a gross loss of INR 270.74 Cr, implying an effective tax benefit/rate of approximately 25%.

Legal Contingencies

The company received NCLT approval for the merger of its subsidiary ACIL Limited with itself in March 2025.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the effectiveness of new internal controls to prevent further inventory discrepancies (INR 270.74 Cr impact) and the successful ramp-up of the railway wheel JV.