Detailed Narrative
Q3 FY26 Performance Overview and Macro Environment
Ramkrishna Forgings reported a consolidated net revenue of ₹1,098 crores for Q3 FY26, marking a 2.23% year-on-year increase from ₹1,074 crores in Q3 FY25 and a significant 20.92% quarter-on-quarter growth from ₹908 crores in Q2 FY26. EBITDA (excluding other income) grew 29.36% YoY to ₹163 crores, with the EBITDA margin expanding by 140 basis points QoQ to 14.9%. The quarter was characterized by a mixed global operating environment, including geopolitical tensions and tariff actions, but a conducive domestic market driven by strong macroeconomic fundamentals and a rebound in automotive demand post-GST rate rationalization.
Strategic Diversification and New Growth Avenues
The company is actively pursuing a strategy to deepen its domestic footprint through targeted investments, product innovations, and capability enhancements. Key adjacent growth segments identified include Railways and Passenger Vehicles. The Railway segment is showing strong momentum, with products being integrated into bogie assemblies and bulk supplies commencing to Indian Railways. The company expects double-digit sales from railways within the next two years and aims for 10% of its revenue share to come from the PV segment by FY28.
Capacity Expansion and Commissioning Progress
Ramkrishna Forgings has made substantial progress on its capacity expansion projects. The aluminium forging facility has been successfully commissioned, with commercial production already underway. The casting facility is currently in its trial run phase and is slated for commercial production in Q4 FY26. Additionally, the machining facility in Mexico is nearing commissioning, and the Rail Wheel joint venture is on track, with trial production anticipated by the end of Q4 FY26, further strengthening global manufacturing capabilities.
New Order Wins and Composition
In Q3 FY26, the company secured new orders totaling ₹680 crores, with a program life of four years. The automotive sector contributed approximately 66% (₹450 crores) of these orders, including ₹406 crores from the CV segment, ₹26 crores from PV, and ₹18 crores from EV. The non-automotive segments accounted for 34% (₹230 crores), with ₹189 crores from the oil and gas sector. Geographically, 60% (₹408 crores) of the new orders originated from the domestic market, and 40% (₹272 crores) from exports.
North America and Export Market Outlook
While North America exports declined by over 40% in the first nine months of FY26 compared to FY25 due to a slowdown in build rates, management believes the worst is over. They anticipate a 10% year-on-year increase in build rates and consumption for North America exports in FY27, with new order wins expected to compensate for past losses. The company targets an export revenue mix of 35% by FY27. The European Union 'Free Trade Agreement' is also expected to make Indian forged and cast parts more attractive, boosting European demand.
Profitability and Margin Management
Despite the positive top-line performance, profit after tax for Q3 FY26 was ₹13.6 crores, a 35.24% YoY decline, impacted by an exceptional provisioning of ₹10.43 crores. Gross margins contracted to 45% due to product mix and higher rejections, but management expects these to normalize in the next quarter, leading to overall EBITDA margin improvement. Efficiency gains in power and fuel costs, partly from renewable energy initiatives, contributed positively to profitability.
Debt Reduction and Financial Health
The company demonstrated strong financial discipline by reducing its debt by ₹350 crores in Q3 FY26, bringing the current debt to approximately ₹2,250 crores. Management has set a target to further reduce the debt to below ₹2,000 crores, potentially reaching ₹1,900 crores, by the end of FY26. This proactive debt management is expected to strengthen the company's balance sheet and support future growth initiatives.