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Dolat Capital Report
RamKrishna Forgings Ltd. printed solid numbers in Q3 FY24 led by 17.7% QoQ growth in domestic segment (due to rise in production volume of TAMO) while export segment de grew -11.4% QoQ, hampered by slow down due to Christmas holidays.
We expect export numbers to improve in coming quarters on the back of increasing order backlog in class 8 trucks, which will reflect in numbers in coming quarters.
Ebitda margin expanded 10 basis points QoQ and 88 bps YoY, to 23%, led by operating leverage and sharp focus on cost control.
Diversification of business into railway and casting, adding warm and cold forging capacity, new business acquisitions, and deleveraging their balance sheet through QIP are key positives for medium to long term.
In addition, increasing capacity and product diversification would help in acquiring new clients and top line growth.
We increase EPS estimate by 8/7% for FY25/26E and recommend 'Accumulate' with SOTP target of Rs 845 (core standalone-Rs 742, Railway- Rs 36 and Multitech Auto Pvt. Ltd.- Rs 41, JMT Auto Ltd.- Rs.25).
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