RamKrishna Forgings Ltd. reported strong Q3FY24 numbers, led by 17.7% QoQ growth in the domestic segment (due to increased production volume of TAMO) while the exports increased by -11.4% quarter-on-quarter, held back by the slowdown due to the Christmas holidays.
We expect the export figures to improve in the coming quarters due to the increase in the order book for Class 8 trucks, which will be reflected in the figures for the coming quarters.
Ebitda margin increased by 10 basis points quarter-on-quarter and 88 basis points year-on-year, to 23%, driven by operating leverage and a focus on cost control.
The diversification of activities in the railway and foundry sectors, the addition of hot and cold forging capacities, new company acquisitions and the deleveraging of their balance sheet thanks to the QIP are key positive elements in the medium and long term .
Additionally, increased capacity and product diversification would contribute to new customer acquisition and revenue growth.
We increase EPS estimate by 8/7% for FY25/26E and recommend ‘Accumulate’ with SOTP target of Rs 845 (Standalone Core-Rs 742, Railway- Rs 36 and Multitech Auto Pvt. Ltd.- Rs.41, JMT Auto Ltd. – Rs.25).
