RKFORGE — earnings call

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Prepared remarks

Moderator · Conference Operator

Mr. Joseph George – IIFL Capital Services Limited

Ladies and gentlemen, good day, and welcome to the Ramkrishna

The next question is from the line of Sunny Gosar from MK Ventures.

Sunny Gosar

My first question is on the debt levels.

So, debt levels have substantially shot up as on September '25 to, I think, more than Rs.

2,500 crores.

So, can you give some colour on what has led to this sharp increase in the debt?

Lalit Khetan

Sunny, I will answer this because you can see the profit has been muted.

So, there are no cash accrual happen in the first 6 months.

And that has almost gone up by Rs.

600 crores in the 6 months, that is mainly on account of the capex program companies incurred of Rs.

400 crores, and you can see Rs.

200 crores reduction on account of creditors of the company.

So that has led to this level.

But debt level is going to sharply recover in H2 with the promoter infusing money, Rs.

150 crores coming back from the income tax and certainly the operating leverage improving on account of improved sales and profitability.

Sunny Gosar

Sure.

So as per the cash flow statement, the consolidated capex for H1 was about Rs.

485 crores.

So, for the full year FY '26, what is likely to be the level of capex outflow?

So basically, what's the incremental outflow in H2?

And by March '26, what is the likely debt levels that we should see from the current, say, Rs.

2,500 crores, Rs.

2,550 crores, of gross debt?

Lalit Khetan

So Sunny, Rs.

500 crores to Rs.

600 crores reduction we should expect by March '26 from here.

Sunny

And this includes the contribution from the warrant money from the promoter?

Lalit Khetan

Between everything, Rs.

500 crores to Rs.

600 crores should go down till March '26.

Sunny

Got it.

Naresh Jalan

So basically, Lalit wants to say that Rs.

2,400 crores is basically leaving aside that we are close to Rs.

2,400 crores of debt and likely Rs.

600 crores of debt will be reduced by financial year-end.

Moderator · Conference Operator

The next question is from the line of Mitul Shah from DAM Capital.

Mitul Shah

First question is on margin side, sir, if I look at your presentation, utilization Q-on-Q has dropped from 69% to 60%.

So, drop is not very big.

So, margin contraction seems to be slightly beyond operating leverage.

So, is there any pricing pressure also?

Naresh Jalan

Mitul, I think Lalit in the previous question has already answered.

Margins, almost Rs.

25 crores hit has come just due to a notional forex loss which we had to book in terms of our imports and equipment.

And in terms of exports, there is no margin hit, but basically, lower exports has affected our margin.

Mitul Shah

So, then the second question is on the order wins.

This other orders you have indicated about 4 to 5 years lifespan, but this railway.

So, this Rs.

200 crore as well as Rs.

96 crore, railway and the Rs.

200 crore from the railway casting.

Are these executable in the next 1, 1.5 years?

Naresh Jalan

These are all annualized.

Mitul Shah

Okay.

And lastly, on the railway project, Sir, we are about to start the operation in March '26.

So, what is further update or any trial runs, or anything is likely to start soon in next 1 or 2 months?

Or March '26, we'll start with the trial runs initially and commercial production will start somewhere middle of '27?

Naresh Jalan

January, we are starting trial runs.

And we expect and we hope that from March onwards, we start commercial production.

Mitul Shah

Sir, lastly, considering this current global scenario and U.S.-related challenges, what would be our long-term strategy to diversify this on the non-U.S. export side in terms of the client addition or geography addition?

Naresh Jalan

Milesh, I would want you to answer this question.

Moderator · Conference Operator

Next question is from the line of Joseph George from IIFL Capital.

Joseph George

All right.

So, 1 clarification.

You mentioned that about Rs.

25 crores of one-off impacts because of FX and Mexico losses, etc. were there in the quarter.

I want to understand how much of this Rs.

25 crores is in stand- alone and above EBITDA?

Lalit Khetan

So, Joseph, if you look at Rs.

4.82 crores of JV is certainly in the consol and Rs.

3 crores Mexico is also in consol account.

The loss on account of tariff on account of forex of Rs.

6 crore is in the stand-alone, and that is above EBITDA.

Joseph George

Understood.

So effectively, you're saying approximately Rs.

16 crores to Rs.

17 crores of EBITDA?

Lalit Khetan

Rs.

17 crores standalone EBITDA, yes.

Joseph George

Rs.

16 crores, Rs.

17 crores.

Okay.

Understood.

So that was one.

The second thing I wanted to understand was, we have this 25,000 cold forging capacity, which was supposed to be 70% booked by 1 million customers and really there's aluminium forging capacity, which is also booked by a firm order.

What is the status of these 2 capacities and the underlying orders?

And when should we expect revenue generation?

Moderator · Conference Operator

The next question is from the line of Sunny Gosar from MK Ventures.

The next question is from the line of Saket Saurabh from Sagari Capital.

Saket Saurabh

So, sir, I think I understand that Q2 had a lot of tariff-related disruptions.

But you had guided that based on Q1 call led by Q4, the stand-alone margin might start getting back to the 20%-odd level.

Now in the updated scheme of things, when do you see that those stand-alone margins of 20% coming up?

Is it now Q1 or after '27?

Naresh Jalan

In stand-alone, we still see that by Q4, basically, now we have 2 businesses, castings and forgings.

Like in my previous answer, I have said at a blended basis, we're looking at 17% to 18% margin.

On a stand-alone

Moderator · Conference Operator

As that was the last question for today.

I would now hand the conference over to the management for the closing comments.

Over to you, sir.

Questions and answers

10:55:21 +05'30' · Research Analyst

Ramkrishna Forgings Limited

Moderator · Conference Operator

The first question is from the line of Siddharth Bassi from SASS&B.

Siddharth Bassi

I will ask a few questions and I'd like it, if you could answer them one by one.

So that will be great.

Firstly, regarding the drop in revenue and the drop in EBITDA margin.

In the last con call, the management had told us that from Q1 onwards, Q2, Q3, Q4 will be looking progressively better,

RAJESH · Research Analyst

Thank you.

We would like to thank all for taking out time to join our earnings call.

We hope we have been able to answer and address all your queries.

For any further information kindly get in touch with us or with CDR India.

On behalf of Ramkrishna Forgings Limited, we wish you all a good week ahead.

We look forward to interacting again in the next quarter.

Thank you very much for talking with us again.

Thank you.

Moderator · Conference Operator

Thank you.

On behalf of IIFL Capital Securities Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

Thank you.

Disclaimer

This is a transcript and may contain transcription errors.

Certain statements made or discussed on this call may be forward looking in nature and must be viewed in conjunction with the risks and uncertainties that the company faces.

The company does not undertake to update these forward-looking statements publicly.

Please also note that this document has been edited without changing much of the content, to enhance the clarity of the discussion.

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