RKFORGE have become an important part of the global market
Aim to enter two biggest markets of trailer axle and differentials.
Triggers
40% of last year’s what order wins will start from second quarter onwards
Capex :
Installed cold forging capability for which they have already received complete sold-out order for seven years, which we’ll start operations from FY '25 first quarter
capex of around INR 300 Crores to INR 350 Crores
Order :
Total order wins of about INR 7.7 billion, INR 770 Crores in FY '23
Company has secured a prestigious order of EUR 4.5 million from a European railway passenger coach manufacturer.
On the TWL consortium TWL has signed a significant contract work with Ministry of Railway Government of India under Aatmanirbhar Bharat initiative. This contract entails the supply of Ramkrishna Forgings Limited
1.54 million forged wheels further solidifying our commitment to supporting the growth and modernization of the Indian railway sector.
Capacity
Company has commenced commercial production of 13,700 tons per annum of R A shaft press line and 10,100 tons for the 5-inch Upsetter.
Due to the extension in production capacity totaling 23,800 tons per annum
will strengthen our ability to meet the increasing demand for high-quality post components in the automotive industry.
Total production capacity now spread 210,900 ton per annum,
Year-on-year growth of 28%.
EBITDA margin for Q1 FY '24 : 22.4%
Acquisitions :
Approved acquisition of Multitech Auto Private Limited and its whollyowned subsidiary Mal Metalliks Private Limited.
The company has a capacity to manufacture 21,600 metric ton per annum machine SG & CI castings and bar draw facility of 6,000 metric ton per annum
This acquisition will make its presence in the passenger vehicle, light commercial vehicle and heavy commercial vehicle segments.
Acquisition of Casting and with the acquisition of Multitech, had helped RKFORGE to be all rounder except the sheet metal, and tyres and engine apart from that they are available across all platforms in any vehicle, which is moving on road
About Rail Wheel Project
❖ Ramkrishna Forgings holds 51% in the Joint Venture and is a lead partner in this railway contract
❖ It will establish a manufacturing plant in India for the production of 200,000 forged wheels per annum
❖ Expected to start operation by end of FY26
Is the planned growth discounted in the current prices since as per the expected growth the stock still seems to be reasonably valued based on FY 25 numbers.
Well, it appears that it is still reasonably valued; in simpler terms, it falls into the category of GARP (Growth at a Reasonable Price). As long as the EPS CAGR (Compound Annual Growth Rate of Earnings Per Share) remains higher than the PE CAGR (Compound Annual Growth Rate of Price-to-Earnings ratio), things should be fine.
The key factor to consider is whether the debt reduction plan is on track or not. The target for the DEBT/EBITDA ratio is set at 1:1. If the company manages to reduce its debt, this will have a positive impact on PAT. I still believe it is reasonably valued.
This is to inform you that the Management of the Company is schedule to meet with the following
Analyst/Institutional Investors in United Kingdom (UK), details of the same are given below:
Total production capacity to be 260,000 ton per annum by the end of FY24
20% Volume Growth is achievable based on recent order Wins which will start delivery from H2 FY24.
Aiming FY25 Debt to Edita as 1.
30% revenue to be Non-Automotive by FY25. (This will Improve margins with supplies to Mining, Earth Moving Farm & Gen. Engg)
TSUYO acquisition would provide a good platform for selling a complete EV Drive Train i.e. Motor Controller, Motor, Differential Assembly, Gears and axles.
JMT Auto, TCIL could materially start contributing from FY25.
FY26, Titagarh JV to start adding to topline. I think with a capacity of 2,00,000 Forged Wheels per annum, at 60-70% Utilization i.e. 150000 wheels, 800-900 Cr can be further added in the Top Line, considering 51% Share from JV)
Margin Improvement of 100 bps every year till 2026 is very much on cards and achievable.
I would like to see if they are able to bring Debt/EBITA at 1 by FY25 and how quickly Management is able to Ramp up JMT Auto.
While other Forging companies showing weak signs of Order Input, RK Forge is gaining market share, mainly International.
Ramkrishna Forgings Limited has informed about the commencement of a Qualified Institutions Placement (QIP) of Equity Shares with a face value of Rs. 2 each.
The company received approval from the Board of Directors on September 30, 2023, and shareholders’ approval on October 28, 2023, for the QIP. The Capital Market Committee, in its meeting on November 8, 2023, authorized the opening of the QIP issue, approved the preliminary placement document dated the same day, and set the floor price at Rs. 644.46 per Equity Share based on the SEBI ICDR Regulations.
The Relevant Date for the QIP Issue was fixed as November 8, 2023, and the company may offer a discount of up to 5% on the floor price, as per Regulation 176(1) SEBI ICDR Regulations. The actual issue price will be determined by the company in consultation with the Book Running Lead Managers.
A meeting of the Capital Market Committee is scheduled for November 13, 2023, to consider and approve the final issue price, including any discount, for the Equity Shares allotted to Qualified Institutional Buyers (QIBs).
Have ₹590 cr of net debt now, target is to be debt-free over the next two years. By FY25, revenues should go up to ₹5,000 cr; company is on track. Post 4th quarter, visibility will be post results By FY26, revenues will go to upwards ₹6,000 cr Titagarh Rail Wheels Limited - JV with TWL will start from FY27 with target margins above double digits Railways business is around 4%, company is looking to more than double to 10% by end of FY25. Company aspires to be non-automotive business. No word on the pledge side
Have ₹590 cr of net debt now, target is to be debt-free over the next two years.
