Ramkrishna Forgings to clock revenues of ₹5,000 cr by FY25

Ramkrishna Forgings Ltd, which expects its additional 56,400 tonne capacity to come on stream by September this year, is hopeful of growing at a CAGR of around 25 per cent and clocking a turnover of close to ₹5,000 crore by FY25.

The company, which had registered a turnover of ₹2,285 crore in FY22, is hopeful of touching revenues of ₹2,900-3,000 crore by the end of FY23.

According to the company’s Wholetime Director and Chief Financial Officer, Lalit Kumar Khetan, the overall capacity utilisation is close to 86 per cent but in some plants, it is more than 100 per cent.

The increase in demand, coupled with the additional capacity being added, will help bring in more revenues for the company.

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“The 56,400 tonne capacity should come on stream by September 2023, and then we are hopeful of touching revenues of close to ₹5,000 crore by FY25,” Khetan told businessline.

The addition of the 56,000 tonne of capacity will help push up the overall capacity of the company to close to 2,35,000-2,40,000 tonne. This would be good enough in the way it is improving its value add per content per vehicle and as well as adding non-auto segments.

Steady demand and diversification to aid growth

The commercial vehicle segment has seen steady growth following the festive season due to the high fleet utilisation of fleets resulting from increased economic and infrastructure activity.

The momentum is expected to continue and the overall commercial vehicle market is predicted to remain strong, driven by an increase in economic activity and the government’s emphasis on infrastructure and electrification, the company said in the earnings call transcript available on the BSE.

The company recorded 24 per cent growth in revenue at ₹752 crore during the quarter that ended December 31, 2022, and the EBITDA margin for the quarter stood at around 22 per cent. The company is hopeful of maintaining a margin of over 22 per cent as it continues to grow given its order book position at present.

Ramkrishna Forgings has been taking steps to diversify its product portfolio and has strengthened its foothold in the EV space. It has recently acquired a 51 per cent stake in TSUYO manufacturing. This will significantly improve its capabilities and expand the market share in evolving EV segment, Khetan said.

The company is looking to invest close to ₹100 crore in TSUYO and is looking to make products such as motor controllers, differential and e-axle, and complete powertrains. It is also looking at high-wattage motors, that will go to the higher-weight vehicles.

The company’s recent plan to acquire JMT Auto has got approval from the Committee of Creditors, and is subject to obtaining the necessary approval from the NCLT New Delhi. The total cost of acquisition is close to ₹125 crore, out of which ₹70 crore will be paid upfront and the balance will be paid over the next four years, Khetan said.

Besides, the company will also deploy a further ₹50 crore of capital in this by way of capex in the organisation as well as the working capital, it said in the earnings call transcript.

Ramkrishna Forgings is expecting good growth coming in from railways as well as the earthmoving equipment side. It aspires to have a premix of 70 per cent auto and 30 per cent non-auto and is hopeful of achieving it in the next six to seven quarters.

JMT Auto is a mix of forging and casting capacity with value-add and had a peaked topline of close to around ₹375 crore before going into insolvency. With those numbers and with the current commodity pricing, the company is hopeful that once the plant is up and running, it should be able to do anything between ₹450-500 crore topline from that.