Ramkrishna Forgings

I generally do not go with an order book, undoubtedly order book is a good indicator but one has to understand if it is B2C, B2B, or B2G. After studying the business, I see that debt reduction is one of the major focuses of RK forging at the moment. Seems like the target is to get DEBT/EBITDA close to 1:1 in the next 2 years. That means a debt reduction of 100-150 cr every year. This will directly have a positive impact on the PAT. One of the interesting parts is that non-auto revenue growth will be 25% by the end of FY24. Overall the volume growth would remain at 15-20%.

Other points from their presentation of Q1 FY24

The forging capacity of the company will be augmented by 56,300 Tons by the addition of a warm forging press, upset forgings, and 6000T press line.

• The company has commissioned 23,800T of capacity as of 18th July
  2023 and the remaining 32,500T will be commissioned by September
  2023

-In addition, the company has planned to set up cold forging
A capacity of 25,000T

• The Company has sufficient capacity for the next phase of healthy &
  robust growth

• Capacity ramp-up along with operating leverage will result in faster
  improvement in profitability

• Future growth capex through internal accruals