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Ramkrishna Forg.
Our verdict on Ramkrishna Forg. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Q1 FY26 consolidated revenue growth was 6% YoY, which is currently tracking below the full-year target of 15-20%. Management cites a challenging global environment and export slowdown. (1 in progress across 1 tracked commitment)
“we are looking at coming year in FY '27 to almost 35% to come from exports and 65% to come from domestic.”
Q3 FY26 EBITDA margin stood at 14.9%. While it improved 140 bps quarter-on-quarter, it remains significantly below the 17-18% near-term guidance and the historical 19-20% levels. (1 missed across 1 tracked commitment)
“But in a premix of both the things, we are on the safer side, 17% to 18% margin going forward.”
The company expects to start generating revenue from the Passenger Car segment starting from FY27. — target: Revenue stream commencement
“RKFL is looking at the next level of growth coming in from the Passenger Car segment with revenue stream starting from FY27.”
The company is focusing on increasing the revenue share from the Electric Vehicle (EV) business. (+1 more commitment)
“Focus on increasing revenue share of EV business”
The company expects the Passenger Vehicle (PV) segment to contribute 10% plus of total revenue by FY28. — target: 10% plus
“So, probably by FY '28, our 10% of the revenue share is going to only come from PV segment.”
See the full cited Management analysis of Ramkrishna Forg.
How durable is the business?
A new focus on EV is evident with the installation of a 3,000T press specifically for Aluminum Forged Components for EVs. (1 new across 1 engine)
“Approximately 66% of these orders were from the automotive sector... In Q3 FY26, auto orders amounting to Rs. 406 crores is from the CV segment, around Rs. 26 crores is from the passenger vehicle segment, i.e. the PV segment and Rs. 18 crores is from the EV segment.”
Cost efficiency improved through renewable energy adoption and electricity duty reductions, helping offset elevated input costs and maintaining EBITDA margins despite gross margin pressure. (1 stable)
“For Q3 FY26, we reported consolidated net revenue of Rs. 1,098 crores, higher by 2% on year-on-year basis compared to Rs. 1,074 crores in Q3 FY25... The EBITDA margin is 14.9% for the quarter”
Export revenue share expanded to 41% in FY25, significantly exceeding the previous 30% level, driven by strong performance in Europe (30%) and North America (26%). (3 expanding, 2 contracting)
“In this quarter our mix is about 70% domestic 30% export... we are looking at coming year in FY '27 to almost 35% to come from exports and 65% to come from domestic.”
The automotive segment continues to dominate new order wins, securing Rs. 524 Crores (74% of total new orders) in Q4 FY25, with a heavy focus on Commercial Vehicles (CV) which accounted for Rs. 463 Crores. (3 expanding, 2 contracting)
“74% of the new order wins are from the automotive segment... Total Auto – 524 Cr”
The segment is seeing a significant shift in order book composition, with Passenger Vehicles (PV) now contributing 47% of new orders, while Commercial Vehicles (CV) face market sluggishness and volume declines. (1 shifted)
“kindly note that 47% of our new Order Book for the Quarter 1 comes from the Passenger Car Segment and another 15% comes from the Automotive Segment.”
See the full cited Business Model analysis of Ramkrishna Forg.
Where does growth come from?
The 3000T press specifically for Aluminum Forged Components for EVs is currently under installation, confirming the acceleration into lightweight materials. (3 accelerating, 2 new trend across 5 signals, 1 leading indicator)
“Aluminum Forgings – Production commenced”
Order inflows are accelerating significantly, with the company reporting Rs. 4,600 Crores in new orders for the full year FY25, compared to the previously noted quarterly run-rate. (5 accelerating across 5 signals)
“We are significantly eyeing PV as our growth engine for next couple of years... probably by FY '28, our 10% of the revenue share is going to only come from PV segment.”
The company is aggressively expanding, with forging capacity set to reach 333,400 MT and casting to 62,400 MT, totaling 395,800 MT of consolidated capacity. (3 accelerating, 2 decelerating across 5 signals, 1 leading indicator)
“Summary on Capacity Expansion... Existing 327,000... Under Commissioning 85,000... Total 412,000”
The railway segment is showing concrete progress with new approvals for assembled undercarriages and a clear roadmap for the Vande Bharat project. (3 accelerating, 2 new trend across 5 signals, 1 leading indicator)
“Indian Railways has started showing a demand worth Rs. 2,000 crores itself for the forthcoming year... we are looking at double-digit sales in next 2 years' time.”
Management has upgraded its growth outlook, now guiding for a higher 15% to 20% revenue growth for FY26 despite recent accounting adjustments. (1 accelerating across 1 signal, 2 leading indicators)
“Railways... FY25 4.6%... 9MFY25 7.3%”
See the full cited Future Growth analysis of Ramkrishna Forg.
What could break the thesis?
Export markets continue to show significant weakness, with Q4 FY25 export revenue dropping 23% year-on-year. While full-year FY25 export revenue was flat (+1%), the sharp quarterly decline indicates the slowdown is intensifying rather than recovering. (5 intensifying, 2 high-severity)
“FY '25, we were north of about Rs. 1,000 crores of revenue. And for the first 9 months, we've clocked about Rs. 480 crores, which basically on a 9-month comparative basis is down more than 40%.”
Profitability remains under severe pressure. Consolidated EBITDA margins dropped from 19.3% in Q4 FY24 to 10.4% in Q4 FY25. Standalone margins also fell from 19.2% to 11.0% in the same period, confirming a sustained downward trend in operational efficiency. (5 intensifying, 1 high-severity)
“PBT & PBT Margin (%)# ... 9M FY25 5.6% 9M FY26 1.6%”
The risk is intensifying as a 10% duty was imposed in the U.S. starting March. This has forced a change in revenue recognition, delaying the booking of Rs. 70 Crores in sales. (4 intensifying, 1 easing)
“So, debt as on date is about Rs. 2,250 crores. So, we have achieved already Rs. 350 crores of debt reduction in this quarter.”
Debt levels have increased significantly. Closing Net Debt rose from ₹818 Crores to ₹1,821 Crores during FY25, a net increase of over ₹1,000 Crores, primarily driven by heavy investments in Property, Plant & Equipment and the Rail Wheel project. (4 intensifying, 1 easing)
“forging capacity utilization came down to 66% in Q3 FY26 compared to last Q3 of 79%.”
Concentration remains high but shows signs of strategic pivoting. While 74% of new Q4 orders are still automotive, the company is actively targeting the Passenger Car segment with revenue expected from FY27 and has secured orders for 'Fully Assembled Bogie Frames' for Railways. (2 easing, 3 stable)
“Approximately 66% of these orders were from the automotive sector... auto orders amounting to Rs. 406 crores is from the CV segment.”
See the full cited Risk analysis of Ramkrishna Forg.
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