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    Kalyani Forge

    KALYANIFRG
    Capital Goods·12 Feb 2026
    Management Summary

    Kalyani Forge delivered a strong Q3 FY26, achieving record EBITDA margins and an all-time high PBT, driven by strategic exits from low-margin businesses and enhanced operational efficiencies. While PAT was impacted by a non-cash deferred tax adjustment, the company is actively expanding its new business order book to ₹162 crores and investing in CAPEX focused on future growth areas. Management is focused on continuous operational improvements and a deliberate strategy for sustainable growth.

    Highlights

    5

    • Revenue of ₹58.22 crores, up ₹1.99 crores QoQ from ₹56.23 crores.

    • EBITDA margin expanded to 15.7%, marking the highest in the company's history.

    • Profit Before Tax (PBT) reached ₹3.94 crores, an all-time high and highest in the last several quarters.

    • Secured a new business order book totaling ₹162 crores, with significant contributions from driveline and axle segments.

    • OEM revenue improved significantly to ₹35 crores in Q3, the highest in the last five quarters.

    Concerns

    3

    • Profit After Tax (PAT) was negative ₹0.12 crores due to a non-cash deferred tax adjustment.

    • Employee costs remained high at ₹12 crores, representing 20.61% of revenue, which management aims to reduce.

    • No specific timeline provided for achieving the aspirational 20% EBITDA margin target.

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹58.22 Cr+3.5%QoQ
    2. 02EBITDA Margin15.7%
    3. 03PBT₹3.94 Cr
    4. 04PAT₹-0.12 Cr
    5. 05Employee Cost₹12 Cr

    Order Book

    high confidence

    Total Value

    ₹ 162 crores

    as of 2025-12-31

    quantified

    Composition

    Mix3 products
    • Connecting Rods66.0%
    • Driveline27.8%
    • Axle6.2%

    Share of order book by product

    Pipeline

    qualified rfp

    RFQ quality for new order book pipeline has drastically improved due to rejection of unrelated and non-core product lines.

    "The new business order book is strategically focused on core and growth areas, with a significantly improved quality of RFQs."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹25 crores

    Debt

    Debt disclosed

    Guidance & targets

    5
    CategoryTargetPriority
    Profitability
    EBITDA Margin
    15.7%
    		High
    Profitability
    EBITDA Margin
    20%
    		Low
    Profitability
    FY26 EBITDA Margin
    Some improvement
    		Medium
    Revenue
    FY26 Revenue
    Similar to last year or slightly higher
    		Low
    New Business
    New Business Productionizing
    30 crores
    		High

    EBITDA Margin Stabilization and Progress towards 20%

    Next quarter and beyond
    Current15.7%
    TargetStabilize at current level, progress towards 20%

    Why it matters

    Core to the company's profitability strategy and a key management focus for long-term value creation.

    our current priority is stabilised at this level, 20% is the next milestone.

    How to verify

    key_financials.metrics[label='EBITDA Margin']

    Risks & concerns

    2
    RiskSeverity

    Volatility in PAT due to Deferred Tax Adjustments

    PAT was negative ₹0.12 crores due to a non-cash deferred tax adjustment, which may recur or reverse in future quarters depending on asset capitalization. — Management acknowledged

    medium

    High Employee Cost Percentage

    Employee costs are 20.61% of revenue (₹12 crores), which is considered high, though management is focused on improving productivity and sales to reduce this percentage. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “But what's going to improve the PAT margin the most, the biggest lever is EBITDA margin and that's why that has been our top most focus. Historically, our EBITDA margin was pretty low and improving that was the top priority. The moment, the more you increase EBITDA margin, it just lifts up PBT as well as PAT, as long as we keep depreciation and interest costs in control.”

    Clarifies management's primary focus on EBITDA margin as the key driver for overall profitability, including PAT, and explains the factors influencing PAT beyond EBITDA.

    asked by Saket Kapoor

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Financial Performance Highlights

    Kalyani Forge reported a strong Q3 FY26 with revenue reaching ₹58.22 crores, an increase of ₹1.99 crores from the previous quarter. The company achieved its highest-ever EBITDA margin at 15.7% and an all-time high Profit Before Tax (PBT) of ₹3.94 crores. However, Profit After Tax (PAT) was negative ₹0.12 crores, primarily due to a non-cash deferred tax adjustment related to asset capitalization.

    02

    Strategic Business Mix Optimization and Margin Expansion

    The company's significant EBITDA margin expansion to 15.7% is attributed to a deliberate strategy of exiting low-margin and non-core businesses, coupled with improved material and power cost discipline. Management emphasized that the current flat revenue growth is a conscious outcome of this business rationalization, which is designed to enhance future sales capability and improve margins sustainably. The long-term target is to reach a 20% EBITDA margin, though no specific timeline was provided.

    03

    New Business Development and Order Book Growth

    Kalyani Forge secured a new business order book totaling ₹162 crores, with ₹107 crores from connecting rods, ₹45 crores from driveline, and ₹10 crores from the axle segment. The company is actively scaling up new export businesses, particularly a European transmission program, and aims to productionize at least ₹30 crores of this new business in FY26. Approximately ₹20 crores of new business has already been productionized in the first nine months of the fiscal year.

    04

    Capital Expenditure and Asset Base Enhancement

    For FY26, Kalyani Forge has a CAPEX budget of ₹25 crores, with 60% allocated to future growth areas like driveline and axle, and 40% to the engine segment. Approximately ₹18 crores has been spent up to Q3, with ₹14 crores capitalized. The company's current fixed asset value is ₹74-75 crores, and the plan is to increase this asset base to support a theoretical installed capacity of ₹500 crores, improving the sales to net fixed assets ratio from 3.5x towards the industry benchmark of 1.5-2x.

    05

    Operational Efficiency and Cost Management

    Operational stabilization, driven by initiatives like machine reconditioning and dye run prioritization, has contributed to improved productivity and reduced rejections. While employee costs remain a concern at 20.61% of revenue (₹12 crores in Q3), management is focused on enhancing productivity, reducing manual work, and increasing sales to bring this percentage down. The company is also working on reducing working capital through improved inventory management and a new credit control system.

    06

    Market Outlook and Geographic Diversification

    The company is bullish on export opportunities, particularly with the Free Trade Agreements with Europe (expected to be effective January 2027) and the US, which are anticipated to drive future growth. Kalyani Forge benefits from a diversified customer base across passenger cars, trucks, construction, and agriculture segments, providing a hedge against seasonal demand fluctuations and leveraging India's high-growth market and premiumization trends.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.