LGB Forge Ltd Q1 FY2027 Concall Summary

Key Takeaways

• Turnaround quarter, modest scale: Revenue reached ₹105 crores, up 10% YoY, and the company turned cash positive with EBITDA improving from ₹2.04 crore to ₹4.82 crore.
• Net profit is now a near-term promise: Management expects net profit "this year onwards," up to 3%, with improvement in coming years, though no specific year is pinned down.
• Chennai plant is the next catalyst: Trial production is targeted for next quarter, regular production at ~50% capacity by Q4, after a delay from statutory clearances.
• Land sale funds the roadmap: The ₹10 crore profit from selling Coimbatore land to a group company will fund projects over the next two to three years without extra debt.
• What to watch next quarter: Whether Chennai trial production actually starts, whether the 6–8% operating margin target holds, and whether management addresses the unanswered dividend and ESM Stage 1 questions.

Financial Performance

• Revenue growth delivered: Total revenue of ₹105 crores represents 10% growth over the previous year, which management attributes to steady progress on the planned roadmap and achieving key targets set for the prior year.
• Cash position turned positive: The company turned cash positive with significant improvement in operating margins, a milestone after prior periods of strain.
• EBITDA jump: EBITDA improved from ₹2.04 crore in FY25 to ₹4.82 crore in FY26, and management says it has a clear roadmap for further improvement this year.
• Net profit expectation: Management has calculated that net profit will materialize this year, up to 3%, and then increase in coming years. Once profit is achieved, return on equity and earnings per share will improve.
• Receivables position: Including tax, receivables come to 90 days or less than 90 days, per management's calculation.

Rajsri Vijayakumar: "We achieved a total revenue of INR105 crores, representing a 10% growth over the previous year. We have turned cash positive with the significant improvement in our operating margins."

Operational Expansion

• Coimbatore plant live: Production commenced after obtaining necessary certifications and customer approvals; the plant currently supports existing demand and strengthens overall manufacturing capacity.
• Chennai plant delayed but close: A slight delay in project timeline occurred due to statutory clearances and unforeseen delays. Trial production is targeted for the next quarter, followed by regular production in the last quarter at approximately 50% of planned production.
• Chennai plant scope: The plant will have two press lines and primarily cater to existing customer requirements. It is expected to contribute significantly towards ensuring seamless supply and play an important role in the machine overhaul plan.
• Land sale mechanics: The land sold was 7 acres in Coimbatore, not part of current operations, and was sold to one of the group companies. The company currently owns land in the Mysore division.
• Proceeds allocation: The ₹10 crore from the land sale will be used for investment activities over the next two to three years for funding projects without taking on extra debt.

Rajsri Vijayakumar: "There was a slight delay in this project timeline due to statutory clearances and some unforeseen delays. However, we are targeting trial production in the next quarter followed by regular production in the last quarter, which will approximately be 50% of the planned production."

Efficiency & Cost Initiatives

• Operational efficiency gains: Improvements in operational efficiency and capacity utilization contributed positively to revenue, driven by operation optimization, elimination of non-value-added activities, better utilization of equipment and manpower, and greater focus on reducing rejections, rework and process variations.
• Maintenance shift: Focus this year is on preventive and predictive maintenance, with emphasis on identifying potential failures before breakdowns. Operators are being trained to identify abnormal conditions early, reduce breakdown hours and improve machine availability.
• Solar power at Coimbatore: The company entered into an agreement with solar power suppliers to procure renewable energy for a portion of electricity requirements at the Coimbatore plant.
• Returnable bins: Introduced returnable bins for finished and semi-finished components for transportation to reduce packaging consumption and minimize waste.
• Data protection: Implemented multi-level user access controls to safeguard data and prevent unauthorized access, and is working towards compliance with applicable data privacy and data protection laws.
• AI exploration: The company is at a nascent stage of exploring AI adoption in specific operational areas in a phased manner, with consideration of data security, privacy and regulatory requirements.

Demand Environment

• Domestic demand strong: Strong domestic demand continues, providing a stable base for the business.
• Export segment stable: The export segment remains stable despite global volatility driven by geopolitical tensions and protectionist measures adopted by various countries.
• Customer outlook positive: Customer orders and outlook indicate stability and confidence in both this year, per management.
• EV exposure indirect: The company does not currently have an active EV portfolio, but expects stable growth reflected in the end markets of its customers.
• Input cost pressure: Geopolitical tensions in West Asia caused supply chain disruptions and a steep rise in input costs including steel, oil and consumables, plus challenges relating to availability of resources.

Rajsri Vijayakumar: "Although we do not currently have an active EV portfolio, we expect stable growth, which is also reflected in the end markets of our customers."

Governance & Shareholder Concerns

• Related party transaction: Material related party transactions with LG Balakrishnan & Bros. Ltd for aggregate value not exceeding ₹75 crores have been placed for shareholder approval.
• Auditor continuity: Statutory auditor Mrs. Suguna has been the auditor for the last few years; no resignation occurred. The Statutory Auditor's Report and Secretarial Audit Report for FY ended March 31, 2026 contain no qualifications, observations, adverse remarks or disclaimers.
• Board addition: Mr. Arjun Parthasarathy was welcomed as a non-executive, non-independent director of the company.
• Employee relations: Currently peaceful and harmonious relationship with all employees.
• Dividend question unanswered: A shareholder asked when to expect even a meager dividend; management did not address the dividend question in their response.
• ESM Stage 1 deferred: A shareholder asked about the reason for ESM Stage 1 categorization on BSE and whether any compliance has been written to authorities to remove it; management deferred to the company secretary to look into it and respond via email, providing no answer during the call.
• Expense questions unanswered: A shareholder asked about steps to reduce other expenses, legal/professional charges, and audit fees; management did not address this question.
• Rights issue proceeds unanswered: A shareholder asked how rights issue proceeds from 2019 are being utilized; management did not address this question.

B. Vijayakumar: "We will not respond to any inquiries that could undermine our market position or disclose strategies to competitors."

Guidance & Commitments

Key Metrics