Ramkrishna Forgings LtdQ4 FY24Auto Components

Ramkrishna Forgings Ltd

Q4 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→Target to achieve INR 5,000 crores topline by FY '25, implying a CAGR of 25%-26% over two years.
→Addition of 56,000 tons capacity by September 2023 to aid growth.
→Expect 15%-20% growth in exports next year driven by new orders, new customers, and new geographies.
→Exports are expected to continue constituting about 35%-40% of volume and topline.
→Domestic market remains strong, though specific growth guidance for FY '24 is awaited.
→EV segment revenue from auto expected to double from current 2% to 3%-3.5% in next 12 months; overall EV contribution expected to reach ~5% in two years.
→Non-auto segments like railways, mining, farm equipment are growing steadily.
→New capacities (cold and warm forging) expected to yield better realization and profitability.
→JMT Auto acquisition to add INR 450-500 crores topline over 18-20 months post NCLT approval.

Category 3

→The company aims to achieve INR 5,000 crores in topline revenue by FY '25, implying a CAGR of approximately 25-26% over the next two years.
→EBITDA margin of 22%+ is targeted to be maintained, with potential upside due to operating leverage as revenue grows.
→Export revenue is expected to grow by 15-20% next year, driven by new orders, customers, components, and geographies.
→EV segment revenue is projected to double from around 2% to 3-3.5% of auto revenue in the next 12 months, and reach about 5% in two years, largely from export markets.
→New capacity of 56,000 tons coming online by September 2023 is expected to yield better realizations and margins because of near net shape components and newer technology.
→JMT Auto acquisition (pending NCLT approval) could add INR 450-500 crores topline after ramp-up in 18-20 months.
→Overall, earnings growth is expected to be strong with sustained margin levels backed by capacity addition, product mix improvement, and export growth.

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Yes

→No explicit mention of any new fundraising through debt or equity in the call transcript.
→The company is focused on reducing debt; has already reduced around INR 300 crores in nine months and expects another INR 50 crores reduction by March 2023.
→The company targets being net debt-free by FY '25-'26.
→Capex plans for FY '23 and FY '24 are INR 250 crores and INR 150-200 crores respectively, funded through cash accruals.
→Acquisition costs for JMT Auto (INR 125 crores) and ACIL (INR 85 crores) will be paid partly upfront and partly over next 4 years, without debt consolidation on RKFL balance sheet.
→The management does not indicate plans for raising fresh equity or debt currently; growth and capex are funded internally and through manageable debt increments specific to acquisitions.

Yes

→The company has won several orders, with execution yet to commence.
→For FY '24, they expect a 15% to 20% jump in exports primarily driven by new order books and new components.
→Regarding domestic orders, no specific revenue guidance was provided; full-year results are awaited for clarity.
→Export growth next year is expected at 15% to 20%, driven by new customers, new products, and new geographies.
→The company is cautiously optimistic about order inflow but refrains from giving exact figures for new orders or total pending order book.
→The addition of 56,000 tons of new capacity by September 2023 is planned, which will support revenue growth to INR 5,000 crores.
→No detailed numeric breakup of current order backlog was disclosed in the call.

Yes

→Current year (FY '23) capex plan is INR 250 crores, including ongoing capacity expansion (Page 13, 17).
→Next year (FY '24) capex is projected at INR 150-200 crores, including maintenance capex of INR 50-55 crores per annum (Page 17, 13).
→Additional capex of INR 100-150 crores expected to complete the 56,000-ton capacity expansion by next year (Page 13).
→Total capex for new capacity expansion around INR 250-300 crores (Page 13).
→Acquisition investments: INR 70 crores paid upfront for JMT Auto with a further INR 50 crores planned for capex and working capital (Page 5).
→Potential cash outflow for FY '24 could include INR 85 crores for ACIL and INR 70 crores for JMT Auto acquisitions, totaling ~INR 150-160 crores (Page 13).
→TSUYO investment planned over five years around INR 100 crores for EV-related products like motor controllers and e-axles (Page 6).

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