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.

Ramkrishna Forgings , a leading manufacturer in the forging industry, has set ambitious targets for the second half, projecting a robust 15-20% volume growth. This optimistic outlook is primarily attributed to the company's strategic expansion of its production capacity.

Capacity Expansion and Growth Projections

Managing Director Naresh Jalan revealed that most of the company's ongoing projects are expected to be operational between late September and mid-October. This timely completion of projects is anticipated to significantly boost utilization levels across the company's facilities.

Looking ahead, Ramkrishna Forgings has outlined an impressive growth trajectory:

• Projected growth of Rs 15,000 to Rs 20,000 crore
• Key Growth Driver: Europe identified as a crucial market for export expansion over the next few years
• North American Operations: Expected to maintain stability despite temporary challenges related to tariffs

Recent Financial Performance

While the company's future outlook appears promising, its recent quarterly results present a mixed picture:

The company experienced a modest 6.00% growth in revenue, reaching Rs 1015.26 crore. However, other financial metrics showed declines:

• EBITDA decreased by 12.00% to Rs 147.00 crore
• EBITDA margin compressed from 17.60% to 14.60%
• Net profit saw a significant drop of 78.00%, falling to Rs 12.00 crore from Rs 55.00 crore in the previous year

Market Response

The market's reaction to these developments was slightly negative, with Ramkrishna Forgings' shares closing 0.95% lower at Rs 574.10.

As the company moves forward with its expansion plans and navigates through current challenges, investors and industry observers will be keenly watching how Ramkrishna Forgings translates its growth strategies into financial performance in the coming quarters.