Event Participants
Executives
5
Chaitanya Jalan, Lalit Khetan, Milesh Gandhi, Naresh Jalan, Rajesh Mundhra
Analysts
16
Abhishek Jain, Aditya, Bharat C. Shah, Geetarth Tandon, Hardik Chheda, Harsh Shah, Jayesh Gandhi, Karan Gupta, Kaushik Jawhar, Kumar Saurabh, Mitul Shah, Pranav Jain, Saket, Sidhaant, Vinil Shah, Viral Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹1,217 crores | +19.84% YoY, flat QoQ; driven by robust domestic demand, improving export volumes, and disciplined execution |
| EBITDA (excl. other income) | ₹218.47 crores | +47% YoY, +5% QoQ; better operating leverage and improved product mix |
| EBITDA Margin | 17.96% | +85 bps QoQ from 17.11%; continued sequential improvement expected |
| Gross Margin | ~54% | +535 bps QoQ; management termed it sustainable with further upside |
| PBT | ₹65.34 crores | +172% YoY vs ₹23.9 crores |
| PAT | ₹46.88 crores | +297% YoY vs ₹11.7 crores |
| Order Inflows | ₹293 crores | Auto ₹278 crores (82% passenger vehicle, 18% two-wheeler; 4-year program life) + ₹15 crores metro segment; PV order entirely domestic EV |
| Net Debt | ~₹1,900 crores | Down ~₹100 crores QoQ from ₹1,990 crores; ≥₹500 crore reduction targeted in FY27 |
| ROC | 12–15% (FY27 guidance) | Recovery to old levels; ~20% targeted for FY28 |
| Exports Share | ~35% of revenue (FY27 guidance) | 20%+ export growth expected; management guided to best-ever export year |
| Ring Rolling Utilization | 127% | At peak; no capacity addition planned, expected to sustain 2–3 years |
Geographic & Segment Commentary
Commercial Vehicles: Core business; demand across the CV ecosystem strengthened further, supported by healthy production schedules and policy clarity around regional supply chains. Strong GST collections and consumption trends reflect underlying domestic economy strength.
Passenger Vehicles & EVs: 82% of Q1 auto order wins (₹228 crores) from domestic passenger vehicle segment, entirely EV-driven. Overall PV order book is ~50/50 ICE vs EV; exports PV currently predominantly EV with ICE bulk supplies also starting. Management called PV growth the "next lever for transformation" of RKFL.
Exports (North America & Europe): International business recorded further improvement led by North America demand alongside improving customer engagement in Europe. Tariff environment more stable, providing greater visibility. Exports guided to ~35% of consolidated revenue with 20%+ growth — highest ever for the company.
Railways & Wheels JV (RKTR): Confirmed 80,000 wheel order from Indian Railways (passenger trains, locomotives, Vande Bharat; wagons excluded) plus ~25,000 wheels from JV partner obligation — covering ~110,000 wheels through FY28. Trial production started; 300 samples to Railways in August; bulk supply expected September–October 2026. Export customers for additional wheels being pursued.
Casting: Integration substantially completed; ramp-up on track with gradual production increase over next three quarters. Realizations temporarily lower due to new capacity commissioning; expected to normalize from coming quarters.
Mexico: Production commenced; ~₹6 crores revenue booked in Q1; significant revenue contribution expected from Q3 FY27.
Non-ferrous (Aerospace, Semiconductors, Robotics): Aluminum forgings already in bulk production; stainless steel order book expected from Q4 FY27; Inconel/titanium/nimonic meaningful contribution in 8–10 quarters. Initial capex of only ₹10–20 crores required; larger capex contingent on order book visibility by end FY28.
Company-Specific & Strategic Commentary
Capex Cycle Completion: Majority of strategic capital expenditure is behind; focus has shifted to higher asset utilization, improved asset turns, and operating leverage. Net block of ~₹3,700 crores supports ~₹9,000 crores sales at 100% utilization (2.5x asset turn); 75–80% utilization achievable before next major capex.
Deleveraging Commitment: Net debt reduced ~₹100 crores in Q1 to ~₹1,900 crores; ≥₹500 crore reduction targeted in FY27, taking net debt to ~₹1,500 crores. Management emphasized continued leverage discipline while funding growth and maintenance capex.
Diversification Strategy: Non-automotive order book share improving across energy, mining, off-highway, and railways. ₹293 crores of new orders secured in Q1 spanning PV, two-wheeler, and metro segments. CV remains core; PV/EV positioned as transformative growth engine.
New Ventures — Aerospace & Advanced Materials: Company is entering non-ferrous manufacturing (aluminum, titanium, Inconel, nimonic) for aerospace, robotics, and semiconductors — sectors traditionally dominated by global players. RFQ quoting underway; capabilities being established with minimal incremental capex.
Working Capital Optimization: Internal targets set: debtor days down 5–10 days, inventory days down 5 days, creditor days up 10 days — a combined 15–20 day improvement targeted over the next 12 months.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| ROC | 12–15% FY27; ~20% FY28 | Recovery to old levels as new assets ramp up utilization |
| Net Debt | ~₹1,500 crores by FY27 end | ≥₹500 crore reduction; company on track |
| Capex | ~₹350 crores FY27 (+₹20–30 crores Rail JV) | Maintenance and growth capex only; strategic capex largely complete |
| Revenue | ₹8,000 crores by FY29 | Delayed one year from earlier ₹8,000 crore FY28 target; implies 22–25% CAGR over next three years |
| Exports | ~35% of revenue; 20%+ growth in FY27 | Best-ever export year; driven by North America and Europe |
| EBITDA Margin | Continued QoQ improvement; no full-year range | Aspiration to return to old ~22% margin levels; timeline not committed |
| Capacity Utilization | ~80% by FY27 end | Ring rolling at 127%; cold forging >70% by Q3; casting ramp-up gradual |
| Working Capital | 15–20 day improvement over ~12 months | Debtors −5–10 days, inventory −5 days, creditors +10 days |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical escalation (West Asia) | Resurgence of conflict remains an overhang; shipping delays create working capital pressure and transit-time elevation. Management noted this as the primary external uncertainty affecting demand sentiment and costs. |
| Energy prices | Energy is one of the biggest cost levers in forging and steel-making; current prices are at peak levels. Gas and shipping costs cannot be fully passed on to customers — escalation beyond current levels is the key profitability risk. |
| Tariff developments | Tariff negotiations could re-emerge; management noted the environment is "considerably more stable" but remains an area of close attention across export markets. |
| Steel price pass-through lag | Raw material (steel) is passed through with a one-quarter lag; quarterly steel price volatility creates temporary margin swings. No hedging mechanism exists for alloy steel. |
| Casting ramp-up | New capacity realizations temporarily below normal levels during ramp-up; expected to normalize in coming quarters as utilization improves. |
Q&A Highlights
Railway Wheels JV — Capacity & Offtake
- Question: Beyond the 80,000 wheels from Indian Railways, how will remaining capacity be utilized, and are wagon wheels included? (Pranav Jain)
- Answer: The 80,000 confirmed wheels cover passenger trains, locomotives, and Vande Bharat — wagons are excluded as Railways supplies cast wheels FOC for wagon building. JV partner obligation of ~25,000 wheels brings utilization to ~110,000 through end FY28. Export customers in Europe and North America are being pursued for additional wheel volumes. (Naresh Jalan)
Rail JV & Mexico Project Timelines
- Question: Status of the railway plant trial and Mexico acquisition ramp-up? (Sidhaant)
- Answer: Rail JV trial production has started; first 300 wheel samples will be submitted to Indian Railways in August for testing, with bulk production expected September–October 2026. Mexico production has commenced with ~₹6 crores revenue in Q1; significant revenue contribution expected from Q3 FY27. (Naresh Jalan)
ROC Targets & Export Growth
- Question: What are the ROC and export revenue targets for this year and next? (Kaushik Jawhar)
- Answer: ROC of 12–15% guided for FY27, rising to ~20% in FY28. Exports expected at ~35% of consolidated revenue — the highest ever — with 20%+ growth. Margin improvement will continue sequentially, though management declined to guide profitability timing. (Lalit Khetan, Naresh Jalan)
Margin Sustainability & Key Risks
- Question: What factors could aid or hurt margins going forward? (Hardik Chheda)
- Answer: Continued QoQ margin improvement is expected from higher utilization and favorable export mix. Primary risks are geopolitical shipping delays tightening working capital, and energy price escalation — gas and shipping costs are not fully pass-through to customers. (Naresh Jalan)
Commodity & Freight Pass-through
- Question: How much of the commodity and freight cost increase is being absorbed? (Mitul Shah)
- Answer: Steel is a pass-through with one quarter lag; gas, shipping, and freight costs fluctuate too rapidly for customer pass-through and are being absorbed. Management is working with customers on absorption mechanisms. Gross margin expansion (+535 bps QoQ) reflects better product mix rather than price revisions alone. (Lalit Khetan, Naresh Jalan)
Non-ferrous & Aerospace Foray — Timeline & Capex
- Question: How long before titanium/Inconel products contribute meaningfully, and what capex is required? (Aditya)
- Answer: Aluminum forgings are already in bulk production; stainless steel order book begins Q4 FY27; Inconel/titanium will take 8–10 quarters for meaningful contribution. Immediate capex is only ₹10–20 crores for heating arrangements; major capacity addition will follow order book and approvals, likely announced by end FY28. (Naresh Jalan, Lalit Khetan)
Leverage Reduction & FY27 Capex Plan
- Question: What are the gross/net debt levels and full-year capex outlook? (Viral Shah)
- Answer: Net debt is ~₹1,900 crores, down ~₹100 crores QoQ from ₹1,990 crores. Management remains on track to reduce leverage by ≥₹500 crores in FY27, exiting at ~₹1,500 crores. FY27 capex guidance is ~₹350 crores, with an additional ₹20–30 crores for the Rail JV. (Lalit Khetan)
₹8,000 Crore Revenue Target & Working Capital Roadmap
- Question: When will the ₹8,000 crore turnover target be achieved, and what are the working capital improvement targets? (Bharat C. Shah)
- Answer: The ₹8,000 crore target is delayed by one year to FY29, implying 22–25% CAGR over the next three years. Working capital targets include debtor days down 5–10, inventory days down 5, and creditor days up 10 — a total 15–20 day improvement over ~12 months. Management stated "the best period for RKFL has just started," citing PV, oil & gas, and non-automotive sectors as growth levers. (Naresh Jalan, Lalit Khetan)
EV vs ICE Mix in PV Order Book
- Question: What proportion of the passenger vehicle order book is electric vehicles? (Saket)
- Answer: The ₹228 crore domestic PV order announced this quarter is entirely EV-driven. Overall PV book is split ~50/50 between ICE and EV customers; export PV business is currently predominantly EV, but bulk ICE supplies are also commencing. (Milesh Gandhi)
Currency Pass-through & Margin Attribution
- Question: Did rupee depreciation contribute to the margin improvement? (Bharat C. Shah)
- Answer: No — all RKFL contracts carry currency pass-through clauses; the company bears no currency risk on either side. Rupee depreciation in the quarter was only 1–1.5%, translating to roughly 1% margin impact on the export portion of the business. (Lalit Khetan)
Key Takeaway
Ramkrishna Forgings reported a strong Q1 FY27 with consolidated revenue of ₹1,217 crores (+19.84% YoY, flat QoQ), EBITDA of ₹218.47 crores (+47% YoY) at a 17.96% margin (+85 bps QoQ), and PAT of ₹46.88 crores (+297% YoY), aided by improved product mix and operating leverage. Order inflows of ₹293 crores — led by ₹278 crores of auto orders, 82% from domestic EV passenger vehicles — underline the diversification thrust, while exports are guided to ~35% of revenue on 20%+ growth, the highest ever. Management guided ROC of 12–15% in FY27 and ~20% in FY28, net debt reduction to ~₹1,500 crores, and an ₹8,000 crore revenue target by FY29, implying 22–25% CAGR. Rail wheels JV trial production has commenced with bulk supply expected by September–October 2026, and Mexico revenue scales from Q3. Key watch points remain West Asia geopolitical escalation impacting energy and shipping costs — not fully pass-through — and the non-ferrous aerospace/semiconductor foray, which is 8–10 quarters from meaningful contribution. Management expressed high confidence in sustained sequential balance-sheet improvement across utilization, working capital, and margins over the next three to four years.