Any current/future new fundraising through debt or equity?

The company is focused on reducing standalone debt by Rs. 100-150 Crores in FY2024. Debt limits remain intact, and commitment costs to banks are factored in. Consolidated debt is expected to remain stable or reduce, depending on acquisitions and cash flows. No explicit mention of new fundraising through equity or debt was made at the current time. Equity contribution of Rs. 180 Crores is planned over three years for the railway JV. Capex (around Rs. 100 Crores in FY2024) will be funded through existing cash flows and debt reduction. Acquisitions like JMT and ACIL will be funded as per cash flo

Any current/future capex/capital investment/strategic investment?

FY 2024 Capex: Post dividend and debt reduction (Rs. 100-150 Cr), remaining cash will be deployed to expand forging capacities and value-add capabilities (Page 21). FY 2025 Capex: Planned, but specifics not detailed; investments will be calibrated with own earnings (Page 10). TSUYO JV (51% stake): Rs. 100 Cr investment planned in phased manner over ~5 years to scale e-axle and transmission solutions, targeting Rs. 500 Cr revenue potential (Page 18). Railway wheels JV: Approx. Rs. 1,200 Cr capex (51% share), production to start late FY2026, aiming for similar margins as standalone business (Pag

Future growth expectations in sales/revenue/volumes?

FY2024 expected to have strong volume and revenue growth, with tonnage growth guidance of 15-20%. Confident of continuing growth trajectory given strong order book, customer visibility, and global scenario. Europe revenue grew to 15% of total within two years, indicating strong global customer acquisition and growth. Railways business expected to almost double sales in the coming year, increasing from ~3% to over 5% of total revenue. Oil and gas segment expected to increase share of business by 100-150 basis points. Capacity ramp-up in fabrication plant, warm forging, and new equipme

Future growth expectations in earnings/operating earnings/profits/EPS?

Naresh Jalan expects continued strong volume and revenue growth in FY2024, targeting 15%-20% tonnage growth similar to the previous year. Margin improvement is anticipated with better operating efficiency, automation, and structure improvements, leading to sustained or better EBITDA margins. Warm forging margins are expected to improve by 100 to 150 bps in the next six months due to modernization. Despite raw material price fluctuations, margins remain insulated and are expected to continue improving. The company is confident of outperforming the market, especially with improved produc

Current/ Expected Orderbook/ Pending Orders?

North American customer has a Long-Term Agreement (LTA) with global contracts backed by steel and inflation adjustments (steel quarterly, inflation and energy annually) (Page 19). Ramp-up plant has immediate order book for capacity utilization, with optimum levels achievable within 6-8 months; production capacity is almost sold-out (Page 12). Europe revenue has grown to about 15% from zero within two years, indicating strong customer conversion and order gains (Page 11). Railways order book expected to nearly double sales from about 3% to over 5% of total revenue this year (Page 15). Oil and g

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Ramkrishna Forgings LtdQ1 FY23Auto Components

Ramkrishna Forgings Ltd Q1 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹572P/E: 128.9Market Cap: ₹10.4K CrSector: Auto Components

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→FY2024 expected to have strong volume and revenue growth, with tonnage growth guidance of 15-20%.
→Confident of continuing growth trajectory given strong order book, customer visibility, and global scenario.
→Europe revenue grew to 15% of total within two years, indicating strong global customer acquisition and growth.
→Railways business expected to almost double sales in the coming year, increasing from ~3% to over 5% of total revenue.
→Oil and gas segment expected to increase share of business by 100-150 basis points.
→Capacity ramp-up in fabrication plant, warm forging, and new equipment installation to support growth.
→Continuous improvements in product mix and margins expected to enhance profitability along with volume growth.
→No specific long-term revenue target given, but management expects growth to potentially exceed current expectations.

Margin guidance

Category 3

→Naresh Jalan expects continued strong volume and revenue growth in FY2024, targeting 15%-20% tonnage growth similar to the previous year.
→Margin improvement is anticipated with better operating efficiency, automation, and structure improvements, leading to sustained or better EBITDA margins.
→Warm forging margins are expected to improve by 100 to 150 bps in the next six months due to modernization.
→Despite raw material price fluctuations, margins remain insulated and are expected to continue improving.
→The company is confident of outperforming the market, especially with improved product mix and increased content per vehicle.
→EPS growth is supported by volume increase, better margin, and tax rate reduction to 25% in FY2024.
→Working capital days are targeted to reduce from 108 to around 100, supporting efficient cash flow management and profit growth.

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Fundraise plans

→The company is focused on reducing standalone debt by Rs. 100-150 Crores in FY2024.
→Debt limits remain intact, and commitment costs to banks are factored in.
→Consolidated debt is expected to remain stable or reduce, depending on acquisitions and cash flows.
→No explicit mention of new fundraising through equity or debt was made at the current time.
→Equity contribution of Rs. 180 Crores is planned over three years for the railway JV.
→Capex (around Rs. 100 Crores in FY2024) will be funded through existing cash flows and debt reduction.
→Acquisitions like JMT and ACIL will be funded as per cash flows; no additional debt increase is anticipated.
→Overall, the company plans to use internal cash flows for growth and acquisitions, aiming to decrease debt gradually.

Order book

Yes

→North American customer has a Long-Term Agreement (LTA) with global contracts backed by steel and inflation adjustments (steel quarterly, inflation and energy annually) (Page 19).
→Ramp-up plant has immediate order book for capacity utilization, with optimum levels achievable within 6-8 months; production capacity is almost sold-out (Page 12).
→Europe revenue has grown to about 15% from zero within two years, indicating strong customer conversion and order gains (Page 11).
→Railways order book expected to nearly double sales from about 3% to over 5% of total revenue this year (Page 15).
→Oil and gas business share expected to increase by 100-150 basis points (Page 15).
→New orders in the railway segment for manufacturing approximately 200,000 wheels annually, with a JVs capex around Rs. 1,200 Crores (Page 5).
→Overall, the company anticipates strong growth in volumes and revenue for FY2024 with a focus on increasing market share across geographies (Pages 13, 17).

Capex plans

Yes

→FY 2024 Capex: Post dividend and debt reduction (Rs. 100-150 Cr), remaining cash will be deployed to expand forging capacities and value-add capabilities (Page 21).
→FY 2025 Capex: Planned, but specifics not detailed; investments will be calibrated with own earnings (Page 10).
→TSUYO JV (51% stake): Rs. 100 Cr investment planned in phased manner over ~5 years to scale e-axle and transmission solutions, targeting Rs. 500 Cr revenue potential (Page 18).
→Railway wheels JV: Approx. Rs. 1,200 Cr capex (51% share), production to start late FY2026, aiming for similar margins as standalone business (Pages 4-5, 21).
→Solar Plant: 7.82 MW rooftop solar project costing Rs. 35 Cr, expected to reduce energy costs, installation within 9 months (Pages 3, 19).
→Capex for JMT Auto and ACIL acquisitions: ~Rs. 100 Cr to modernize plants post-acquisition (Page 5).
→Debt reduction remains capital allocation priority alongside growth capex (Pages 7, 21).

How does Ramkrishna Forgings Ltd rank vs peers in Auto Components?

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