Ramkrishna Forgings Limited, a key player in the forging industry, has made a significant move by allotting warrants to its promoter entity. The company's Capital Market Committee has approved the allotment of 9,75,000 warrants to Riddhi Portfolio Private Limited, a promoter of the company, at a price of Rs 2,100 per warrant.

Warrant Allotment Details

The allotment, valued at a total consideration of Rs 204.75 crore, was executed following approvals from various regulatory bodies:

• Board of Directors approval on May 31, 2025
• Shareholders' approval at an Extraordinary General Meeting (EGM) on June 28, 2025
• In-principle approval from BSE Limited and National Stock Exchange of India Limited on August 7, 2025

Financial Implications

Key Points of the Allotment

1. Conversion Rights: Each warrant can be converted into one equity share of face value Rs 2 within 18 months from the date of allotment.
2. Conversion Price: The warrant holders have the right to convert by paying the remaining 75% of the issue price.
3. Regulatory Compliance: The allotment is in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
4. Impact on Share Capital: The company stated that there is no change in the paid-up equity share capital as a result of this warrant allotment.

Significance of the Move

This strategic allotment of warrants to a promoter entity could be seen as a vote of confidence in the company's future prospects. It potentially allows Ramkrishna Forgings to raise additional capital for expansion or other corporate purposes, while also increasing promoter stake upon conversion of the warrants.

The move comes at a time when the forging industry is witnessing significant changes and opportunities, particularly in the automotive and industrial sectors. Ramkrishna Forgings' decision to issue warrants may be aimed at strengthening its financial position to capitalize on these market dynamics.

Ramkrishna Forgings Limited, a leading forging company, reported a significant decline in profit for the first quarter, despite a modest increase in revenue. The company faced headwinds from decreased realization, changes in export-domestic mix, and other factors, but remains optimistic about future growth and margin recovery.

Financial Performance

For Q1, Ramkrishna Forgings reported:

• Consolidated revenues of Rs 1,015.00 crores, up 6% year-on-year
• Profit After Tax (PAT) of Rs 12.00 crores, down sharply from Rs 55.00 crores in the same quarter of the previous year
• EBITDA margin of 14.6%, a decrease of 300 basis points year-on-year

The company's profitability was impacted by several factors:

• Rs 40.00 crore impact from decreased realization and export-domestic mix changes
• Rs 6.00 crores in U.S. tariff costs
• Rs 6.66 crores in forex losses from the rail wheels joint venture
• Rs 5.00 crores in machine import losses

Order Book and Future Outlook

Despite the challenges, Ramkrishna Forgings secured new orders worth Rs 660.00 crores in Q1:

• Rs 502.00 crores from exports
• Rs 158.00 crores from domestic markets

The company's management expects a gradual margin recovery, aiming to return to 21-22% EBITDA margins by Q4 or Q1 of the following year on a standalone basis.

Debt Reduction and Railway Supply

Ramkrishna Forgings plans to reduce its net debt by Rs 300.00-400.00 crores during the fiscal year. The company also received approval for railway undercarriage supply worth Rs 60.00 crores, indicating potential growth in the railway segment.

Management Commentary

Naresh Jalan, Managing Director of Ramkrishna Forgings, commented on the results during the earnings call: "With the storm we have weathered in the previous quarter, I think you will see continuous efforts with margins getting improved quarter-on-quarter. We are very hopeful that by the last quarter of the fiscal year or first quarter of the next, we should be back to our old days of margins on a standalone basis."

Jalan also highlighted the company's progress in the railway sector, stating, "We have just received approval for complete assembled undercarriage for Passenger Vehicles, and we look at extremely solid set of numbers coming in the next couple of years."

Capacity Expansion and New Ventures

The company is in the process of adding an 8,000-tonne press line and a 3,000-tonne aluminium forging facility, which will increase capacity by 40,000 metric tonnes and 3,000 metric tonnes, respectively, during the current fiscal year.

Ramkrishna Forgings is also expanding its presence in the castings business, with a new facility expected to commence trial runs in the next two weeks. The company aims to reach a monthly run rate of 6,000 tonnes in castings and nearly double its top line from this segment in the next half of the year.

Conclusion

While Ramkrishna Forgings faced significant challenges in Q1, the company's management remains confident about its future prospects. With new order wins, capacity expansions, and a focus on margin recovery, the company is positioning itself for growth in both domestic and export markets. Investors and industry observers will be watching closely to see if Ramkrishna Forgings can successfully navigate the current headwinds and return to its targeted profitability levels in the coming quarters.