Detailed Narrative
Q4 & FY25 Financial Performance Highlights
Kalyani Forge reported a robust financial performance for FY25, achieving its highest PAT and EBITDA in a decade. Full-year PAT stood at ₹8.3 crores, an 80.43% increase from ₹4.6 crores in FY24, while EBITDA grew by 49.7% to ₹26.5 crores from ₹17.7 crores. Q4 FY25 also saw significant improvement, with PAT reaching ₹2.23 crores, a 214% jump from ₹0.71 crores in Q4 FY24. Despite these profit gains, FY25 revenue remained flat at ₹239.2 crores, slightly down from ₹240 crores in FY24, attributed to shedding non-profitable business and market factors.
Growth Formula and Business Development
The company's growth is underpinned by a formula of strong execution, business development, and CapEx. FY25 saw all-time high new order wins of ₹115 crores, a 21% increase over FY24's ₹95 crores. This growth is supported by new machine connecting rod programs with SOPs commencing in Q4, and samples approved for a new high-volume automotive export order. Kalyani Forge also received a collaboration excellence award from Mahindra for fast development of connecting rods, highlighting strong OEM relationships.
Capital Expenditure and Modernization Initiatives
Kalyani Forge is committed to continuous investment, with CapEx of ₹24.4 crores in FY25 and an approved budget of ₹25 crores for FY26. This CapEx is strategically allocated towards reconditioning old forging presses, a forging modernization program, and machining capacity additions for products like connecting rods, driveline, and axle parts. The goal is to improve operational efficiencies, product quality, and OEEs, ensuring existing margins are maintained or increased. Fixed assets at Q4 end stood at ₹60.4 crores, with ₹15 crores in Capital Work In Progress.
Operational Efficiency and Sustainability Focus
Operational efficiency is a key driver for margin expansion, with FY25 EBITDA margin improving to 11.1% from a previous 7-8% trend. Initiatives include improved sales mix, removal of non-strategic businesses, and a detailed energy audit to identify power cost reduction and energy efficiency areas. The company also achieved a sustainability assessment score exceeding 70%, which is becoming an important factor for winning orders. A new CHRO has been appointed to strengthen HR and cultural transformation towards a performance-oriented organization.
Strategic Market Diversification and Export Growth
The company is diversifying its product offerings across engine, driveline, and axle components, serving commercial vehicles, passenger cars, industrials, and agro segments. Exports increased by 11% in FY25 to ₹48 crores (approx. 20% of total revenue), with a strategic target to increase this to 50% of total revenues in the next few years. Kalyani Forge is also present in the railway sector with niche components for braking systems and has started a project in the defence sector, aligning with its long-term growth strategy.
Capital Structure and Shareholder Returns
Kalyani Forge is prudently managing its capital structure, securing term loans for FY26 CapEx without planning additional debt for the current plan and actively retiring older debt. The company maintains a close watch on its debt-to-equity ratio. For shareholder returns, a dividend of ₹4 per share was declared for FY25, the highest in the last five years. The board plans to discuss a formal dividend policy in upcoming meetings, and an equity capital raise is under evaluation for future growth.