Kalyani Forge Q1FY27 Results: Net profit up 218% YoY to ₹4.48 crore
Net profit surged 218% YoY to ₹4.48 crore, driven by EBITDA margin expansion to 16.2%. Revenue grew 3.9% YoY to ₹67.07 crore, with industrial segment leading growth at 67%. ROCE crossed 20% for the first time, reaching 22% from 18% in the previous quarter. Debt-to-EBITDA ratio improved to 2.51, below target, as deleveraging continues. New business contribution hit record 22% of revenue, with wheel hub pipeline valued at ₹20 crore.
*this image is generated using AI for illustrative purposes only.
Kalyani Forge Limited reported a 218% year-on-year increase in net profit for Q1FY27, driven by significant margin expansion and operational efficiency gains. The forging manufacturer posted a net profit of ₹4.48 crore against ₹1.41 crore in the same quarter last year, while total revenue rose 3.9% to ₹67.07 crore.
The company’s earnings per share (EPS) stood at ₹12.31. Return on capital employed (ROCE) improved to 22% from 18% in the previous quarter, marking the first time it has crossed the 20% threshold. This performance reflects a normalized profit trend, excluding the deferred tax gain that inflated Q4FY26 results.
Financial Performance Overview
Revenue growth was supported by market share gains across passenger car, truck, and industrial segments. The top-line expansion of 3.9% year-on-year and 13.2% quarter-on-quarter highlights improved execution. EBITDA reached an all-time high of ₹10.89 crore, with the EBITDA margin expanding by 640 basis points to 16.2% from 9.3% in Q1FY26.
| Metric | Q1FY27 | Q1FY26 | Change |
|---|---|---|---|
| Total Revenue | ₹67.07 crore | ₹64.53 crore | +3.9% YoY |
| Net Profit (PAT) | ₹4.48 crore | ₹1.41 crore | +218% YoY |
| EBITDA Margin | 16.2% | 9.3% | +640 bps |
| ROCE | 22% | 14% | +800 bps |
Profit before tax (PBT) margin expanded by 600 basis points to 9.2%, while PAT margin increased by 450 basis points to 6.7%. The bottom-line growth is primarily attributed to these margin improvements rather than volume alone.
What the Numbers Show
A notable divergence exists between revenue growth and profitability metrics. While total revenue grew modestly by 3.9% year-on-year, net profit surged by 218%. This indicates that the primary driver of value creation in this quarter was operating leverage and cost discipline rather than top-line volume expansion. The company’s focus on phasing out low-margin legacy businesses appears to be yielding immediate financial benefits, as evidenced by the disproportionate rise in PAT relative to revenue.
Operational Highlights
The cash conversion cycle improved to 148 days from 168 days in the previous quarter, reflecting tighter working capital management. The debt-to-EBITDA ratio declined to 2.51 from 3.53, falling below the company’s target level and signaling continued deleveraging.
Cost-saving initiatives under the Vriddhi Council have realized ₹19.1 crore to date against an annual target of ₹50 crore. These savings are annualized and contribute directly to EBITDA while also helping absorb inflationary cost pressures in raw materials and indirect expenses.
Segment Growth
- Engine components: Revenue grew 38% YoY to ₹40 crore, maintaining a 60% share of total sales.
- Axle products: Grew 22% YoY, showing substantial traction.
- Driveline: Increased 11% YoY.
- Industrial segment: Recorded the strongest percentage growth at 67% YoY, though from a smaller base.
- Passenger cars: Grew 35% YoY, driven by OEM demand and new business ramp-ups.
Business Development and Capex
New business launched in the last three years contributed 22% of total revenue, an all-time high, amounting to approximately ₹13 crore. Wheel hub samples are in the validation phase, with potential annual revenue of ₹20 crore. A new wheel hub line is being installed using existing CNC machines from phased-out businesses, aligning with the company’s low-capex expansion strategy.
Total capex for FY27 is planned at ₹30 crore, funded 75% through debt and 25% through internal accruals. Sixty percent of this capex is allocated to future growth areas like driveline and axle components. Machining capacity is set to increase from 1.8 lakh pieces per month to 3 lakh pieces by the end of FY27.
OEM revenues grew 31% YoY to ₹40.7 crore, marking the fourth consecutive quarter of growth in this category. The company continues to optimize its business mix by deprioritizing low-volume Tier 2 customer businesses in favor of high-volume OEM and Tier 1 accounts.
Historical Stock Returns for Kalyani Forge
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.15% | +3.11% | +11.65% | +8.13% | -3.80% | +236.00% |
Can Kalyani Forge sustain its 16.2% EBITDA margin in subsequent quarters as raw material inflation persists and the one-time benefits from phasing out low-margin legacy businesses diminish?
How will the company's strategy of funding 75% of its ₹30 crore capex through debt impact its debt-to-EBITDA ratio, given it has just fallen below the target level of 2.51?
What is the expected timeline for wheel hub samples to move from validation to mass production, and will this new product line significantly offset potential slowdowns in traditional engine component demand?
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