An Indian penny stock that is currently in the Castings, Forgings & Fasteners has hit a 5 per cent upper circuit despite the company’s poor financial performance, as the company plans to diversify its portfolio by entering into the defence sector by making a capex plan worth Rs 670 million
The shares of Tirupati Forge Ltd, with a market capitalization of Rs. 405.82 crores on Wednesday. Has hit an upper circuit of 5 percent, trading at a CMP of Rs 34.31, from the previous closing price of Rs 32.68. The stock has given returns of 93.3 percent in the past year.
What’s the news
Tirupati Forge ltd is undergoing a strategic transformation amid global headwinds, particularly the challenges posed by the current U.S. tariff regime that has impacted its export-led business, as 55 per cent of the company’s revenue was dependent on foreign exports. In response, the company has realigned its growth approach, aiming for resilience and long-term value creation. With a renewed focus on diversification, Tirupati Forge is making a strategic entry into a high-growth sector like defence manufacturing, an area strengthened by strong government support and rising domestic demand.
Defence capex plans
India’s defence sector is experiencing strong growth, backed by the government’s “Make in India” initiative and rising budgetary support. With a record Rs 6.8 lakh crore allocated to the Ministry of Defence, 75 per cent of the capital procurement is reserved for domestic manufacturers. The country plans to spend Dollar 130 billion over the next five years to modernise its military, driving the sector’s projected 13 per cent CAGR from FY23 to FY30.
On the global front, rising geopolitical tensions and the need to rebuild weapon inventories are pushing defence budgets higher. The global defence spending is projected to reach US dollar 2,546.9 billion by 2028, growing at a CAGR of 4.9 per cent. This global upswing, combined with India’s strategic focus, presents a significant opportunity for Tirupati Forge Ltd to expand both locally and internationally.
Tirupati Forge Ltd has planned a capital expenditure of Rs 670 million to set up a defence manufacturing facility, This project is expected to deliver strong financial returns, with a projected asset turnover ratio of approximately 4x, highlighting efficient capital utilisation. The company anticipates EBITDA margins exceeding 25 per cent, a substantial improvement from the current margin of 14.3 per cent, indicating strong profitability potential from this new vertical. The facility is set for commissioning by Q4FY26, with commercial production beginning in Q1FY27. The company is also in advanced discussions to secure long-term offtake agreements, which would provide revenue visibility and further de-risk the investment.
Company’s overview
Tirupati Forge, with decades of expertise, is a leading Indian manufacturer of forged and machined components, operating a state-of-the-art facility spread across 5 acres. The company has an installed capacity of 15,000 TPA and adheres to high-quality standards. It is among the top suppliers of flanges in India and one of only three companies to install the 630-ton Lasco Press Line. With 55% of its revenue coming from overseas markets, including the USA, Canada, Malaysia, Europe, and Africa.
Its Revenue has reduced by 16.7 per cent YoY from Rs. 33.53 Crores in Q4FY24 to Rs. 27.93 Crores in Q4FY25, and its Net profits have decreased by 32.29 per cent from Rs. 1.92 crores in Q4FY24 to Rs. 1.3 Crores in Q4FY25
Written By LIKESH BABU S
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