Ramkrishna Forg.

Ramkrishna Forgings Limited reported strong financial results for Q4 FY26, with consolidated revenues reaching ₹1,216.78 crores, marking a 28% year-on-year and 11% quarter-on-quarter increase. EBITDA, excluding other income, stood at ₹208.19 crores, a significant 111% YoY and 27% QoQ growth. This performance led to an improved EBITDA margin of 17.1%, up by 220 basis points sequentially. For the full fiscal year 2026, consolidated revenue was ₹4,238 crores (up 5% YoY) and EBITDA was ₹642.70 crores (up 15% YoY), though profit before tax for FY26 was ₹112.58 crores, a 24% decline compared to FY25 (excluding exceptional item^📎s).

While the global macroeconomic environment presented challenges, including the Middle East conflict, energy price volatility, and supply chain disruptions, the domestic market remained robust. India's economy continued its growth trajectory, supported by strong consumption, sustained government capital expenditure, infrastructure development, and improving manufacturing momentum. This domestic strength was a key driver for the company's solid top-line growth in Q4 FY26.

In Q4 FY26, the company secured new orders totaling ₹594 crores, with a program life of four years. The order book composition reflects a successful diversification strategy, with 56% of orders originating from the Automotive segment and 44% from Non-Automotive. Within Automotive, Commercial Vehicles contributed ₹323 crores and Electric Vehicles ₹11 crores. The Non-Automotive segment saw ₹258 crores from the energy sector and ₹2 crores from off-highway, indicating a broadening customer base.

The railway business has emerged as a strong growth pillar, increasing its share of revenue to 7.5% in FY26 from 4.6% a year ago. The new rail wheel joint venture is on track, with commercial production anticipated to commence by the end of May or June 2026. The company plans to supply approximately 40,000 wheels to Indian Railways in FY27, expecting to generate roughly ₹400-450 crores in revenue from this plant during the year.

Management is focused on optimizing capacity utilization, targeting 85-90% in casting and 75-80% in cold forging by the end of FY27. Overall existing capacity utilization is projected to reach 80-85% by the end of the current financial year. The improved EBITDA margins in Q4 are expected to sustain and further improve in coming quarters, driven by higher utilization levels and a more remunerative export mix, which is targeted to exceed 40% of volumes in the next two years.

A key capital allocation priority for FY27 is significant debt reduction, with a target to reduce debt by ₹400-500 crores, supported by promoter funding and strong operational performance. Capex for FY27 is planned to be modest, not exceeding ₹300-400 crores, primarily allocated towards value-added initiatives and contributions to joint ventures. Further capex plans for FY28 are still under evaluation, contingent on customer discussions and capacity requirements.

The trailer axle business, a relatively new B2C venture, generated approximately ₹120 crores in FY26 with a 4-5% market share. The company aims to nearly double this business to ₹250 crores and achieve a 10% market share in FY27. The EV segment is also performing strongly, both domestically and overseas. The company targets to derive 10% of its revenue from the passenger vehicle segment, which is synonymous with EV, within the next two years, aligning with its diversification strategy.

In Q4 FY26, the company made a provisioning of ₹42 crores for Expected Credit Loss (ECL). This provision was made as a prudent measure, considering the current economic scenario and global volatility^🌐, despite the underlying amount being fully receivable. The income related to this provision, from electricity duty, was recognized as exceptional income but was not carried into the profit to maintain a conservative approach.