Skip to content

    Kalyani Forge Q1 FY27 earnings call

    KALYANIFRG
    Capital Goods·12 Aug 2026
    Management Summary

    Kalyani Forge Limited reported a strong Q1 FY27 with significant improvements in profitability and operational efficiency. PAT surged over 218% YoY to ₹4.48 crore, driven by an all-time high EBITDA margin of 16.2% and improved ROCE of 22%. The company's focus on business mix optimization, new order wins, and working capital management contributed to these positive results, despite some challenges in indirect material costs and a decline in the agro business segment.

    Highlights

    5

    • PAT for Q1 FY27 stood at ₹4.48 crore, marking an over 218% year-on-year increase from ₹1.41 crore in the previous year.

    • EBITDA margin reached an all-time high of 16.2%, a 640 basis point improvement year-on-year from 9.3%.

    • Return on Capital Employed (ROCE) crossed 20% for the first time, improving to 22% from 18% in the previous quarter.

    • Total revenue for Q1 FY27 was ₹67.07 crore, representing a 3.9% year-on-year growth and 13.2% quarter-on-quarter growth.

    • The cash conversion cycle improved to 148 days from 168 days in the previous quarter, indicating tighter working capital management.

    Concerns

    2

    • Agro business revenue declined by 31% year-on-year due to consolidation of core businesses and phasing out of legacy low-margin businesses.

    • Indirect material costs (consumables, cutting tools) increased by 15-30% due to global disturbances, with full pass-through to customers still a work in progress.

    Key financials

    Single quarter

    08 metrics
    1. 01Total Revenue₹67.07 Cr+3.9%YoY
    2. 02PAT₹4.48 Cr+2.2%YoY
    3. 03EPS₹12.31
    4. 04EBITDA Margin16.2%+6.9%YoY
    5. 05PBT Margin9.2%

    Segment breakdown

    Product Group
    ₹40 Cr Engine Sales22% Axle Sales Growth11% Driveline Sales Growth60% Engine Share of Revenue12% Other Share of Revenue
    Market Segment & Geography
    35% Passenger Cars Growth48% Trucks Growth67% Industrial Segment Growth-31% Agro Business Growth16% Export Sales Mix₹40.7 Cr OEM Revenues₹13 Cr New Business Revenue
    List

    Order Book

    medium confidence

    Pipeline

    qualified rfp

    Wheel hub samples in progress, connecting rod business share increase, exports business (gear blanks, 100% machined condition)

    "New business inquiries are continuing, and the company is receiving several RFQs monthly, with no slowdown experienced in new business inquiries."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹30 crores

    75% funding from debt and 25% from internal accruals

    Debt

    2.5x EBITDA

    Guidance & targets

    6
    CategoryTargetPriority
    Profitability
    EBITDA Margin
    20%
    		High
    Revenue
    Sales CAGR
    at least 20%
    		Medium
    Efficiency
    Fixed Asset Turnover
    2.0
    		High
    Capacity
    Machining Capacity
    3 lakh pieces per month
    		High
    Operations
    Wheel Hub Line Online
    online
    		High
    Cost Savings
    Vriddhi Council Annual Savings
    as much of ₹50 crore as possible
    		Medium

    What to watch in Q2 FY27

    5

    EBITDA Margin Trajectory

    next quarter
    Current16.2%
    TargetCloser to 20%

    Why it matters

    To assess progress towards the internal target of 20% EBITDA margin, a key profitability driver.

    We are targeting internally 20% as an EBITDA margin over the coming quarters, and this is in line with our industry benchmarks.

    Risks & concerns

    2
    RiskSeverity

    EV Transition Impact on Engine Business

    While the company's product portfolio is largely EV-agnostic or in less impacted segments (heavy commercial vehicles), there is a risk to the engine business in passenger cars, though exposure is low. — Management acknowledged

    medium

    Indirect Raw Material Price Volatility

    Indirect materials like consumables and cutting tools saw 15-30% price increases due to global disturbances, with full pass-through to customers still being negotiated. — Management acknowledged

    medium

    Q&A highlights

    8

    “Yes, so the wheel hubs are basically components that go in passenger cars, one on each wheel. If it's a two-wheel drive it's two per vehicle; if it's a four-wheel drive it's four per vehicle. So this is tied to passenger vehicle growth it's a very large market. And particularly, we are supplying Gen 3 wheel hubs, which are the latest and best technology in the market.”

    Clarifies the market opportunity and technological advantage for a new product line with ₹20 crore annual revenue potential.

    asked by Ajit Sethi

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview

    Kalyani Forge Limited delivered a strong Q1 FY27, with PAT increasing over 218% year-on-year to ₹4.48 crore. Total revenue reached ₹67.07 crore, marking a 3.9% YoY and 13.2% QoQ growth. The company achieved an all-time high EBITDA margin of 16.2%, a 640 basis point expansion from the previous year, and ROCE improved to 22%, surpassing the 20% mark for the first time.

    02

    Operational Efficiency & Cost Savings (Vriddhi Council)

    The company's EBITDA margin expansion to 16.2% is attributed to operating leverage compounding and shop floor efficiency improvements. The Vriddhi Council projects, focusing on plant engineering, material and power cost discipline, and operational stabilization, have realized ₹19.1 crore in annualized cost savings to date against a ₹50 crore annual target. These savings are partly flowing directly into EBITDA and partly offsetting cost increases from inflation.

    03

    Business Development & New Orders

    New order wins are progressing, particularly in wheel hub components, which represent an annual revenue potential of ₹20 crore. The company is also seeing increased business share in connecting rods from existing customers and scaling up its exports business, especially gear blanks in 100% machined condition. Revenue from new businesses, launched in the last three years, now accounts for 22% of total revenue, approximately ₹13 crore for the quarter.

    04

    Capital Expenditure & Capacity Expansion

    Kalyani Forge has an FY27 capex plan of ₹30 crore, with 60% allocated to future growth areas like driveline and axle, and new business ramp-ups. This capex will be funded 75% by debt and 25% by internal accruals. The company plans to expand its machining capacity from 1.8 lakh pieces per month to 3 lakh pieces per month by the end of FY27, and the new wheel hub line complex is expected to be online by the end of Q2 FY27.

    05

    Financial Ratios & Working Capital Management

    Key financial ratios showed significant improvement, with Debt to EBITDA improving from 3.53 to 2.51, now below the target level. The cash conversion cycle improved to 148 days in Q1, the best in five quarters, down from 168 days in the previous quarter. This was achieved through efforts in reducing non-moving inventory, focusing on direct materials, structured collections, and bill discounting facilities.

    06

    EV Transition Strategy

    The company's product portfolio is largely hedged against EV growth. Engine products are primarily in heavy commercial vehicles and industrial off-road segments, which have a long lifecycle. Driveline and axle products are EV-agnostic and grow with all vehicle platforms. Kalyani Forge is investing in new EV-relevant products like wheel hubs and expanding stub axle forging capacity to capture opportunities in the evolving automotive market.

    This is an AI-generated summary of a publicly available earnings call transcript.