Ramkrishna Forgings Ltd Q1 FY2025 Concall Summary

Key Takeaways

• Margin expansion despite headwinds: EBITDA margin reached 23.1% (adjusted), up 70 bps YoY, even as Red Sea costs and election-related spending persisted. Management sees this as sustainable.
• Volume growth commitment intact: Management reiterated 15% to 20% volume growth for FY25, citing past order wins now converting into steady offtake and a visible order book.
• Order inflow stays strong: Q1 saw INR 1,679 Crores in new orders, split across auto and non-auto segments in India and North America, to be executed over four years.
• Subsidiaries turning the corner: JMT Auto (now Ramkrishna Casting Solutions) began operations, Multitech showed margin improvement, and ACIL is ramping up, all driven by operational efficiency.
• What to watch next quarter: Whether the Vande Bharat bogie prototype passes validation, opening a direct path into Indian Railways orders, and if Multitech’s seasonal Q1 dip reverses as promised.

Margin & Profitability

• Adjusted EBITDA at 23.1%: The 70 bps YoY expansion came from better export price realization and a richer product mix, partially offset by a one-off INR 17.5 Crores election contribution booked in other expenses.
• Export realization improved: Price hikes and new customer wins from prior-year order announcements converted into higher realizations, lifting gross margins.
• Domestic realization dipped: A 3% YoY domestic revenue decline reflected both lower customer offtake and a pass-through of lower steel prices, which are driven by India’s supply-demand curve rather than global indices.
• Red Sea cost is now structural: The INR 20-25 Crores impact from the Red Sea crisis has become a regular precedent, with inventory built into the system. Management sees no resolution unless the war stops.
• Employee and shipping costs rose: A INR 3 Crores QoQ increase in employee cost came from pay-for-performance, while other expenses grew on higher volumes, store consumption, processing charges, and hardened shipping rates.

Naresh Jalan: "I think impact was INR 20 Crores and I think still the impact remains similar in the similar range and that has become a regular precedent. I think Red Sea issue unless the war stops, I think there is nothing which can be done. So, it has become a regular course of business right now."

Order Book & Revenue Visibility

• Q1 order inflow of INR 1,679 Crores: The book spans four years of execution (except railways, which follows contract terms) and covers auto and non-auto segments across India and overseas.
• North America delivered INR 526 Crores: Within that, the commercial vehicle segment contributed INR 201 Crores, light vehicles INR 109 Crores, and EV auto INR 16 Crores.
• Non-auto wins added INR 200 Crores: Orders came from mining, earthmoving, and other segments, diversifying the revenue base beyond automotive.
• INR 1,200-plus-Crore executable order book: This is a four-year book, with roughly INR 300-plus Crores executable annually starting next year. Management calls it 100% executable.
• Past wins now converting: Management declined to share a cumulative order book figure, stating that prior orders are already on stream and converting into business.

Railways & New Ventures

• Vande Bharat bogie order at INR 270 Crores: The order covers assembled bogies, not individual components. Prototypes have started and will be submitted for validation in the coming quarter. Execution is planned across FY26 and FY27.
• Validation unlocks direct railway access: Once the bogie design is approved, the company gains entry into Indian Railways’ current Vande Bharat manufacturing program and other private-sector orders the government is advancing, with opportunities opening roughly six months after validation.
• Ramkrishna Titagarh JV on track: The joint venture is moving as planned, with the first batch of production for railway validation expected in the last quarter of FY26.
• Customer rationalization still in discussion: Talks with customers around 10-15% rationalization are ongoing, though no outcome was disclosed.

Naresh Jalan: "Once this validation of bogie happens it will open also new opportunities for us directly into the Indian Railways. This is a private sector order which we have got. But the - once the validation and our design is approved it will open also an opportunity after 6 months in current railway manufacturing of the Vande Bharat. And other private sector orders also which government is in process of going forward."

Subsidiary Performance

• Ramkrishna Casting Solutions (formerly JMT Auto) started operations: The renamed entity has begun contributing, with margin improvement driven purely by operational efficiency.
• Multitech showed margin gains: EBITDA margin reached 16% plus, with management guiding a further 100-200 bps improvement going forward. Q1 casting production was seasonally lower due to extreme summer heat, with significant changes expected in coming quarters.
• ACIL ramp-up underway: Operations are being scaled, and the subsidiary is already showing traction with 23%-plus margins for the quarter from operational efficiencies and cost reductions.
• Subsidiary debt elevated: Consolidated gross and net debt rose by roughly INR 100 Crores due to investment in subsidiaries, though management expects debt to return to FY24 levels by year-end.

Competitive Position & Export Dynamics

• Export growth sustained over 4-5 years: The company has been constantly growing exports and is striving to continue, with product mix changes and new customer additions now showing traction.
• Export raw material pricing follows global indices: North American exports track the North American index, European exports track the European index, insulating realization from domestic steel price swings.
• Management sidestepped competitive comparisons: When asked why export orders are coming to Ramkrishna Forgings specifically and how pricing differs from competitors, management declined to comment on others’ pricing or capabilities, stating only that the company is doing good marketing and is a good supplier.

Naresh Jalan: "I cannot tell you why others cannot. But I can tell you, it means that we are doing good marketing and good -- we are good suppliers."

Guidance & Commitments

Key Metrics