RKFORGE — earnings call

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Prepared remarks

Moderator · Conference Operator

Mr. Annamalai Jayaraj – 360 One Capital Market Private Limited

External Participants

Annamalai Jayaraj – 360 One Capital Market Private Limited • Balasubramanian – Arihant Capital • Aditya Kumar – Old Bridge Mutual Fund • Ayush Goyal – CAVI Capital • Kiran Naik – Mody Fincap • Darshil Jhaveri – Crown Capital • Sunny Gosar – MK Ventures • Kumar Saurabh – Scientific Investing • Vinil Shah – Dalal & Broacha • Saket Saurabh – Sagari Capital • Kiran Garge – Knightstone Capital Management LLP • Kunal Bhatia – Dalal and Broacha • Kushal – Asian Broking

Moderator · Conference Operator

Ladies and gentlemen, good day and welcome to the Ramkrishna

Thank you.

We have first question from Balasubramanian from Arihant Capital.

Please go ahead.

We have next question from Ayush Goyal from CAVI Capital.

Ayush Goyal

So, my first question was regarding the presentation.

Like in this quarter's presentation, the order that has split over the next 4 years for financial year 2027 is Rs.

1,550 crores.

And in the last presentation, it was Rs.

2,200 crores.

So, like there's a Rs.

600 crores reduction.

So, have any of the orders been revoked or something?

Lalit Khetan

No, no. So, Ayush, how it works.

So, it was incremental order.

So last presentation what you see for that was incremental order for FY26 which has gone.

So residual order has come here in FY27.

Ayush Goyal

Okay.

So basically, the order was executed earlier than expected?

Lalit Khetan

No, no. I mean, so see what you are looking at FY28, again it is Rs.

2,800 crores, but Rs.

1,100 crores incremental over FY27. You understand that?

So, there was some adjustment every year.

I hope you understand.

Moderator · Conference Operator

Thank you.

The next question is from Kiran Naik from Mody Fincap.

Please go ahead.

Kiran Naik

Thank you for giving me an opportunity, sir.

Sir, can you give me a rough idea what will be the revenue growth in FY27?

Naresh Jalan

No, I think we will not be able to give any number to FY27. But with the current order book and with the current capacities in place, we are looking at continued growth trajectory, and we are looking at a healthy growth in FY27.

Kiran Naik

Okay.

And EBITDA margin for '27?

Naresh Jalan

It will continue to, I think with what if you have seen quarter-on-quarter 200 basis points we have improved in terms of our EBITDA margins.

And I think with the current scenarios in place, we are looking for healthy growth in both our top line and the bottom line of the company.

Moderator · Conference Operator

Thank you.

The next question is from Darshil Jhaveri from Crown Capital.

Please go ahead.

Darshil Jhaveri

Hello, good evening, sir.

Thank you so much for taking my question, sir.

Firstly, congratulations on the great set of results, sir.

Sir, just wanted to, like, confirm like in terms of casting when we are saying we'll be at near full utilization.

So, did I hear correctly, sir, we could do nearly Rs.

900 crores of additional revenue from that, sir?

Naresh Jalan

No, no, we have not put any number to it.

I think Lalit has clarified out of the 70,000 odd tons of casting capacity, already current utilization we are getting a significant revenue.

Additional casting capacity which has come in the by end of March, this is going to create a at the current commodity levels, Rs.

400 to Rs.

500 crores revenue in the coming years.

Darshil Jhaveri

Okay.

So, the new March capacity would be around Rs.

400 crores - Rs.

500 crores.

And sir, sorry but I'm a bit new to the company.

So, when we talk about the wheel sets, so we are expecting to do around 40,000 wheel sets.

So, what are the unit economics of it?

Like is this on a similar margin that our company does on a consolidated level and also in terms of what is the selling price?

So, could you help me with that, sir?

Naresh Jalan

I cannot give you the selling price, but I can tell you that the wheels are in a similar trajectory of the forging business we do right now.

And it is a new capex and we have set up a capacity for 230,000 wheels.

This year railway offtake guarantee is for 40,000 wheels which we are getting ready to supply in this financial year.

Darshil Jhaveri

Okay, okay.

So, is this like on a broad basis the incremental revenue would be how much from the wheel set, sir?

Naresh Jalan

So, I think selling price, it is right now very difficult for me to tell you because the contract was awarded two years back.

So, we will need to have a real-time pricing done with two years of inflation and other things to capture and get to the new pricing.

So, I will not be able to give you exact number right now.

But we should be anything between Rs.

400 crores to Rs.

450 crores roughly in terms of revenue from the wheel plant.

Darshil Jhaveri

Okay, okay.

No, that's fair enough.

Yes, yes, that's it from my side, Sir.

Thank you so much.

Moderator · Conference Operator

Thank you.

The next question is from Sunny Gosar from MK Ventures.

Please go ahead.

Thank you.

The next question is from Kumar Saurabh from Scientific Investing.

Please go ahead.

Kumar Saurabh

Yes.

Sir, I have one question on the aluminium capacity which is there.

In terms of realization or margin, how is this business?

Naresh Jalan

Commodity price itself is close to around Rs.

400 per kg.

So obviously realization per ton is going to be always higher because of the commodity pricing.

Margins are close to around 14% to 15% at the absolute numbers.

Kumar Saurabh

Okay, okay.

So almost similar to our current business.

So, it should not.

Moderator · Conference Operator

Thank you.

The next question is from Vinil Shah from Dalal & Broacha.

Please go ahead.

Vinil Shah

Hello, sir.

Good evening.

Thank you for the opportunity.

So, my question was in respect of realization for our forgings.

So even if we take our annualized capacity utilization, we are already close to 70% or 74% capacity utilization as per our presentation if we take the annualized installed capacity.

But yet our realizations have been poorer than the Q4 of FY 2025.

So even if we move forward with a higher capacity utilization, how do we plan to improve our realization of Rs.

1lakh per ton, sir?

Naresh Jalan

No, I think realization also is affected by the commodity price.

I think realization is directly linked to the commodity price.

And if the whole year as you must have seen that raw material price has continued to decrease.

So, with the decreasing trend of raw material pricing vis-à-vis FY25, that is the effect which we have had.

In terms of product mix, I think we have had a much better product mix in the second half of the year of this financial year.

So, I think we have done much better than what presumably would have been with the current commodity price if the product mix would not have been what it is right now.

Vinil Shah

No, sir, because my confusion was because our export realization has increased from Rs.

1.77 lakhs to Rs.

1.85 lakhs?

Naresh Jalan

Both the things, I think export realizations are always much better.

And if you see the previous year, exports were higher than this current financial year as a percentage.

So, as the export grows, automatically the overall realization is going to be much better than what it is currently there.

Vinil Shah

Alright Sir.

Thank you.

That’s all from my side.

Moderator · Conference Operator

The next question is from Mr. Saket from Sagari Cap.

Saket

So, first question is pertaining to the non-auto order wins.

So almost INR250-odd crores order has come from energy segment.

So, can you just explain what exactly what kind of order is this within the energy space?

Naresh Jalan

Milesh, can you answer this question, please?

Milesh Gandhi

Basically, as you know, energy storage has become the latest trend with the market.

And we have received a lot of orders from companies which are very doing very good in energy space in the North America market.

And they have a very ambitious plans with regard to the energy storage devices.

And these devices actually require a lot of forgings and castings

Moderator · Conference Operator

Thank you.

The next question is from Kiran Garge from Knightstone Capital Management LLP.

Please go ahead.

Kiran Garge

How much revenue did we generate from railway assembly undercarriage for the full year?

Naresh Jalan

Can you repeat the question, please.

Kiran Garge

How much revenue did we generate for the railway assemble undercarriage for the full year?

Naresh Jalan

We will not be able to give you exact component by component revenue achievement.

But we have achieved a significant portion.

Railway business as an overall 7.5% is overall in terms of our railway business which is performing and we are looking at double digit almost to achieve the number by this year from railways.

Kiran Garge

Okay, thank you.

Moderator · Conference Operator

Thank you.

The next question is from Kiran Naik from Mody Fincap.

Please go ahead.

Kiran Naik

Sir, thank you for giving me an opportunity again.

Sir, can you tell me from where you are buying aluminium which is your raw material for forging?

Naresh Jalan

We are buying from Hindalco.

Kiran Naik

Hindalco.

Only one supplier you have or you import also?

Naresh Jalan

We basically are customer directed buy.

Kiran Naik

Okay, okay.

Thanks, Sir.

Thank you.

Moderator · Conference Operator

Thank you.

The next question is from Kunal Bhatia from Dalal and Broacha Stock Broking Limited.

Please go ahead.

Kunal Bhatia

Yes, hi, sir.

Thank you for the opportunity.

Sir, I just had a clarification question.

You mentioned that this time around you'll be having almost an 80% utilization on your capacities of 350,000 odd tons.

But how what is your say your target which you are expecting in terms of the overall sales volume?

Naresh Jalan

Sales volume I think every quarter-on-quarter you'll see significant improvement.

But I think in terms of percentage is very difficult to say.

But we are very confident whatever we'll make we'll be able to sell that.

Moderator · Conference Operator

Thank you.

The next question is from Mr. Kushal from Asian Broking.

Please go ahead.

Kushal

Are there any plans to increase ring rolling capacities?

Naresh Jalan

No. I think there is no plans right now in this financial year to increase the ring rolling capacity.

Kushal

Okay, thank you, sir.

Moderator · Conference Operator

Thank you.

The next question is from Mr. Aditya Kumar from Old Bridge Mutual Fund.

Please go ahead.

Aditya Kumar

Sir, just one clarification.

The orders that you have won of Rs.

323 crores on the CV part, how much of that would be domestic and how much of that would be exports?

Naresh Jalan

Milesh?

Milesh Gandhi

You repeat the question please.

Aditya

Yes.

I was asking the Rs.

323 crores order that we have won on the CV side, what would be the split between domestic and exports?

Milesh Gandhi

Against the Rs.

323 crores, in the CV more than 50% of it is export and around 50% is from the domestic.

Aditya

Okay, okay.

Thank you.

That's it.

Moderator · Conference Operator

We have the next question from Mr. Kushal from Asian Broking.

Please go ahead.

Kushal

Just again regarding ring-rolling, as I'm seeing here it's at 121% utilization.

So, does it affect in any way negatively crossing the capacity.

Naresh Jalan

No. Basically, it is 121%.

If you see the history also, ring-rolling has been operating at more than 100% as always and it does not affect in terms of the life of the equipment or in any way.

Kushal

Thank you, sir.

Moderator · Conference Operator

Thank you.

As there are no further questions in the queue, I now hand the conference over to management for closing comments.

Over to you, sir.

Questions and answers

13:30:27 +05'30' · Research Analyst

Ramkrishna Forgings Limited

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

Annamalai Jayaraj

Before somebody joins from the question queue, sir, how is the demand shaping in US market, sir?

I was asking how is Class 8 volumes picking up in the recent times?

Naresh Jalan

I think Class 8 trucks are very, very strong right now.

I think since last 3 months, we are seeing destocking happening in our warehouses in North America.

And I think we are looking at fresh revenues coming in from this quarter onwards from North America Class 8 trucks in significant manner.

Annamalai Jayaraj

And you expect this to sustain for some time, sir, at least a year or two?

Naresh Jalan

I think at least for 2 years.

For calendar year, it is good to say that it's going to stay till third quarter of calendar year '27.

Good evening, sir.

Thank you so much for the opportunity.

Sir, on the wheel set plant, mentioned it will be commencing from Q1 FY '27 onwards.

Whether we have submitted 300 trial wheels and for the approval?

And from Q1 onwards, what kind of run rate we can expect quarter-on-quarter basis in terms of volume?

Naresh Jalan

No, I think 300 wheels we are supposed to submit in the month of June or July.

I think when Lalit said we are going to commence production, it means we are starting the plant, I think probably by end of May or June, wherein we'll start manufacturing wheels and commercial production will start immediately.

So, we don't need to wait for 300 wheels to get approved.

Once these 300 wheels are supplied, we can continue supply.

This year, we are looking at supplying almost 40,000 wheels from that plant to the Indian Railways.

So, this will start from the coming financial year onwards, right, sir?

The 40,000 wheels will reflect FY '27 onwards?

Naresh Jalan

FY '27 onwards.

Okay, sir.

What kind of utilization level we can expect, sir, out of 2 lakhs?

So, the 40,000 will be delivered in this financial year itself, right?

Naresh Jalan

Yes, 40,000 will be delivered in this financial year.

So, I think then it will solve the whole industry problem.

Is it the right way to understand, sir?

Naresh Jalan

I don't know about the industry problem.

I think as per our contractual obligation, we are supposed to supply 40,000 wheels.

We are gearing up to supplying 40,000 wheels in this year.

Okay, sir.

Sir, on the diversification side, I think we are targeting 10% plus kind of revenue from PV in the next 2 years.

Also trying to be a primary supplier for EV, CV makers and aerospace alloys trials also we can.

Trying to understand like what kind of specific defense or aerospace contracts we are focusing on and what kind of contracts we are focusing to get post aluminium forging commissioning side?

Naresh Jalan

No, already I think post commissioning of aluminium forgings, we have already started bulk supplies to EV suppliers, EV equipment manufacturers globally in terms of the needs of aluminium forgings.

And

Yes, sir.

Sir, on the capacity utilization side, the forging utilization, it's mentioned nearly 70% in Q4. But if you look at last year Q4, it's 83%.

But if you look at cold forging, the capacity utilization is almost 40% kind of range.

Like if you could share how we are going to ramp up to 80% to 85% kind of range by FY27?

Naresh Jalan

No, I think vis-à-vis last year when you compare, you have to also take in account the capacity of 8,000 ton pressline and other addition in terms of overall forging capacity which we have had.

And basically, this capacity utilization is going to happen from order book already in place.

We are very hopeful that this year we will have a much better utilization vis-à-vis the last quarter.

And in terms of cold forging, we are at 40% because approvals in cold forging is mainly to the passenger vehicle sector.

And this is taking more time in the global market to get approvals in place.

As and when approval gets in place, utilization will improve.

And to be putting a timeline to it, I think we are not able to do that.

But we are pretty hopeful by this year-end, we should be having close to around 75% to 80% utilization from cold forging also.

Got it, Sir.

Thank you, sir.

Thank you so much for the detailed explanations.

All the best.

Moderator · Conference Operator

Thank you.

The next question is from the line of Aditya Kumar from Old Bridge Mutual Fund.

Please go ahead.

Aditya Kumar

Hi, thank you for the opportunity and congratulations on a good set of numbers, sir.

Sir, my first question is on the presentation that you have shared.

So, it has been showcased that Rs.

1,550 crores of new orders will be executed in FY27. So, does that include castings also or is it only forgings stand-alone business that it is showing?

Naresh Jalan

No, it is consolidated - forging and casting together.

MUNDHRA · Research Analyst

Thank you.

We would like to thank all for taking out the time and joining our earnings call.

We hope we have answered all your queries and for your satisfaction.

Would like to further inform that get in touch for with us or CDR if you have further information required.

We look forward to interacting again next quarter.

Thank you again very much for talking to us.

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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