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    Ramkrishna Forgings Limited

    RKFORGE
    Automobile and Auto Components·12 Nov 2025
    Management Summary

    Ramkrishna Forgings reported a challenging Q2 FY26 with a consolidated loss of ₹9.5 crores, driven by subdued demand, tariffs, and one-time forex losses totaling ₹25.26 crores. Despite the headwinds, the company secured new orders worth ₹1,116 crores and sees strong domestic traction post-GST cuts. Management expressed confidence in a recovery in Q3 and Q4, with new capacities like cold forging, aluminum forging, and the JV wheel plant set to ramp up utilization and contribute to revenue and margin improvement, targeting 17-18% blended EBITDA margins going forward.

    Highlights

    5

    • New orders worth ₹1,116 crores secured in Q2 FY26, with 69% from automotive and 27% from railway segments.

    • Domestic market has bounced back sharply post-GST cut, showing good traction and contributing to domestic growth.

    • Cold forging capacity is already at ~40% utilization and expected to reach 80-85% in FY27.

    • Aluminum forging bulk shipments have started, with 85% utilization expected by March/April next year.

    • Overall order book of ₹6,000-7,000 crores expected to generate over ₹1,000 crores in annual revenue by FY28.

    Concerns

    5

    • Consolidated revenue declined by 10.6% QoQ to ₹907.53 crores.

    • EBITDA (excluding other income) decreased by 17.5% QoQ to ₹122.54 crores, with margin contracting by 110 basis points to 13.5%.

    • Company reported a consolidated loss after tax of ₹9.5 crores in Q2 FY26.

    • One-time impacts totaling ₹25.26 crores (forex loss, tariff impact, Mexico operations loss, JV forex loss) significantly affected profitability.

    • Debt levels increased in H1 FY26 due to muted cash accruals and ₹400 crores in capex.

    What Changed1

    vs Q3 FY26

    Guidance items11 → 16 (+5)

    Key financials

    Single quarter

    04 metrics
    1. 01Consolidated Revenue₹907.53 Cr-10.6%QoQ
    2. 02EBITDA (excl. other income)₹122.54 Cr-17.5%QoQ
    3. 03EBITDA Margin13.5%-1.1%QoQ
    4. 04PAT₹-9.5 Cr

    Order Book

    high confidence

    Total Value

    ₹ 6,000 crores

    as of 2025-09-30

    range

    Inflow this qtr

    ₹ 1,116 crores

    Execution

    Parts of orders (Europe) to start in phases from next year onwards, entire order book into production from FY28 onwards. Sales from Europe/other places start Q1 FY27, reach 100% by last quarter.

    Composition

    Mix3 segments
    • Automotive (Q2 inflow)69.6%
    • Railway (Q2 inflow)26.5%
    • Non-auto (Q2 inflow)3.8%

    Share of order book by segment

    "The company has secured significant new orders, particularly from international geographies and the railway segment, with a substantial portion of the overall order book expected to generate revenue from FY28 onwards."

    Source:
    Prepared remarks

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹100 crores

    Debt

    Gross ₹2,400 crores

    Liquidity

    Undrawn ₹700 crores

    The company has Rs. 700-800 crores in credit lines available on its balance sheet.

    Guidance & targets

    15
    CategoryTargetPriority
    EBITDA Margin
    Blended EBITDA Margin
    17-18%
    		High
    Capex
    H2 FY26 Capex Outflow
    <₹100 crores
    		High
    Capex
    FY27 Capex
    <₹100 crores
    		High
    Capacity Utilization
    Overall Capacity Utilization
    85%
    		High
    Capacity Utilization
    Casting Facility Utilization
    80-85%
    		High
    Capacity Utilization
    Cold Forging Utilization
    60%+
    		High
    Capacity Utilization
    Aluminum Forging Utilization
    85%
    		High
    Revenue
    Peak Revenue from Current Capacity
    ₹6,200-6,500 crores
    		High
    JV Operations
    JV Wheel Plant Trial Runs Start
    January '26
    		High
    JV Operations
    JV Wheel Plant Commercial Production Start
    March '26
    		High
    JV Operations
    JV Wheel Plant FY27 Wheels Production
    40,000 wheels
    		High
    JV Operations
    JV Wheel Plant FY28 Utilization
    80-85%
    		High
    JV Operations
    JV Wheel Plant FY28 Revenue
    ₹1,600-1,700 crores
    		High
    JV Operations
    JV Wheel Plant FY28 EBITDA Margin
    17-18%
    		High
    Order Book Execution
    Annual Revenue from ₹6,000-7,000 Cr Order Book
    >₹1,000 crores
    		High

    JV Wheel Plant Commercial Production

    Next quarter (March '26)
    CurrentTrial runs starting January '26
    TargetCommercial production from March '26

    Why it matters

    Successful commissioning and commercial production of the JV wheel plant is crucial for new revenue streams and diversification.

    our wheel plant is going to start as per our presentation also, you must have seen we are confident to start operations from March '26 onwards and trial runs to start from January onwards.

    How to verify

    guidance_and_targets[metric='JV Wheel Plant Commercial Production Start']

    Risks & concerns

    3
    RiskSeverity

    Challenging global environment and geopolitical tensions

    Disrupted supply chains, currency volatility, and higher input costs added pressure on margins. — Management acknowledged

    medium

    Subdued demand and tariffs on exports

    Impacted revenues from international customers, particularly in the US due to tariff confusion and demand slowdown. — Management acknowledged

    high

    Notional forex losses and losses from Mexico/JV operations

    These one-time impacts of ₹25.26 crores significantly affected Q2 profitability, with currency fluctuations being uncontrollable. — Management acknowledged

    medium

    Q&A highlights

    7

    “Siddharth, actually assuming that in the first quarter of the year, the tariff was only 25% and post reciprocal tariff of 25%, the tariff went up to 50%. And there was a lot of confusion until mid of September, when the government of U.S. has clarified that automotive tariff is only going to be 25%. And that led to a slowdown of dispatches for the customers because they were not prepared to pass on any tariff beyond 25%, which had been agreed by them initially.”

    Clarifies the specific reasons for the revenue and margin decline, attributing it to tariff confusion and subsequent demand slowdown in the US market, leading to reduced dispatches and inventory management decisions.

    asked by Siddharth Bassi

    3 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Financial Performance and Profitability Challenges

    Ramkrishna Forgings reported a consolidated revenue of ₹907.53 crores in Q2 FY26, marking a 10.6% quarter-on-quarter decline from ₹1,015 crores. EBITDA, excluding other income, stood at ₹122.54 crores, a 17.5% QoQ decrease, resulting in an EBITDA margin of 13.5%, down 110 basis points. The company incurred a consolidated loss after tax of ₹9.5 crores, primarily due to one-time📎 impacts totaling ₹25.26 crores, including ₹6.77 crores in forex loss on equipment imports, ₹10.75 crores from tariff impact🌐s, ₹3 crores from Mexico operations, and ₹4.84 crores in JV forex losses.

    02

    Strategic Order Wins and Diversification Efforts

    Despite the challenging environment, the company secured new orders worth ₹1,116 crores in Q2 FY26, with a program life of four years, excluding the railway segment. The automotive sector contributed 69% (₹777 crores) of these orders, while the railway segment accounted for 27% (₹296 crores), and non-auto for 4% (₹43 crores). Additionally, ₹200 crores in orders for railway castings were bagged. All non-railway order wins originated from international geographies, with H1 FY26 seeing ₹927 crores from Europe and ₹307 crores from North America's PV segment, reflecting successful diversification.

    03

    Capacity Expansion and Utilization Outlook

    The company's capex program is largely complete, with H2 FY26 outflow expected to be less than ₹100 crores and FY27 capex also negligible. The casting facility, with 45,000 tonnes capacity, is almost sold out and projected to achieve 80-85% utilization in FY27. Cold forging capacity is currently at ~40% utilization, targeting 60%+ next quarter and 80-85% in FY27. Aluminum forging has commenced bulk shipments and is expected to reach 85% utilization by March/April next year, indicating a strong ramp-up of new capacities.

    04

    Railway Segment and JV Wheel Plant Progress

    The railway segment is a key focus, showing significant traction with orders for fully finished assembled bogey frames and ₹200 crores for castings. The JV wheel plant is on track, with trial runs scheduled to begin in January 2026 and commercial production expected from March 2026. This JV is projected to produce 40,000 wheels in FY27 (approximately 30% utilization) and reach 80-85% utilization by FY28, contributing ₹1,600-1,700 crores in revenue with 17-18% EBITDA margins.

    05

    Debt Management and Liquidity

    The company's gross debt increased in H1 FY26 due to muted cash accruals and ₹400 crores in capex. However, management expects a sharp recovery in H2, with a projected debt reduction of ₹500-600 crores by March 2026, bringing the gross debt to around ₹2,400 crores. This reduction will be supported by promoter infusion (₹150 crores from income tax) and improving operating leverage. The company also has ₹700-800 crores in available credit lines, indicating sufficient liquidity.

    06

    Outlook on Margins and Revenue Growth

    Management expressed confidence that the worst is behind them, anticipating Q3 and Q4 results to be 'extremely surprising and on the upside.' They project blended EBITDA margins (including casting, forging, and B2C) to return to 17-18% 'very soon.' The overall order book of ₹6,000-7,000 crores accumulated over the last six quarters is expected to generate over ₹1,000 crores in annual revenue by FY28, with the company maintaining its full-year double-digit growth guidance.

    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.