The Auto Components & Equipment industry in India is a vital sector contributing 2.3% to the nation’s GDP and employing over 1.5 million people. In FY 2022-23, the industry achieved a record turnover of ₹5.6 lakh crore (approximately $69.7 billion), reflecting a growth of 33%. Projections indicate it could reach $200 billion by 2026.
With a market capitalization of Rs 18,922.75 crore, the shares of Ramkrishna Forgings Limited were trading at Rs 1,046.40 per share, increasing around 2 percent as compared to the previous closing price of Rs 1,029.75 apiece.
Brokerage Target:-
UBS, one of the well-known brokerages globally, gave a ‘Buy’ call on the auto ancillary stock with a target price of Rs 1,500, indicating a potential upside of 43 percent from Tuesday’s price of Rs 1,046 per share.
Rational:-
According to the brokerage, RK Forgings has a low single-digit worldwide market share, indicating a significant runway for expansion. The preceding growth drivers remain valid. However, the company’s strategy to transform from a pure forging company to a comprehensive assembly solution provider diversifies its product line and propels it up the value chain.
Recent orders:-
On August 30, Ramkrishna Forgings was granted a large commercial contract for 8.25 million euros (about Rs 73.65 crore) by a well-known European OEM and Tier 1 supplier. According to the arrangement, the business will supply front and rear axle components for the next five years.
On August 24, the company secured a large commercial deal for 17.2 million euros (roughly Rs 156 crore) from a Eurasian client in the farm equipment market. The deal lasts four years, with an annual value of around 4.31 million euros.
New initiative:-
The firm manufactures forged goods and has cutting-edge production facilities in Jamshedpur. It supplies a wide range of industries, including automotive, railroads, agricultural equipment, bearings, oil and gas, power and construction, and earth movement and mining, both in India and worldwide.
Financial Performance:-
Examining the company’s financial performance, revenue increased by 13 percent from Rs 892 crore in Q1FY24 to Rs 1,005 crore in Q1FY25. During the same period, net profit zoomed by 3 from Rs 79 crore to Rs 81 crore.
Order Inflow & management comments:-
Ramkrishna Forgings Ltd received a significant order inflow, amounting to Rs. 1,679 crore to be executed over four years. The order book also includes an undercarriage business order from a metro car in the railway segment, contributing to our diversification into the non-auto space.
In addition, the Board of Directors has also approved the acquisition of Resorts Libertad, S.A. de C.V. in Mexico. This acquisition marks a significant step in its strategic expansion, and the company also plans to commence its machining and warehousing operations from Q3 FY25 onwards.
Company Snapshot:-
Ramkrishna Forgings Limited operates in two segments: Forging Components and Others. The Forging components segment produces and sells forged automobile components, sanitization, and cargo business, including services for tours and travel.
Written by:- Abhishek Singh
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