Ramkrishna Forgings Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Margin recovery underway, but fragile: EBITDA margin improved ~220 bps QoQ to 17.1%, yet energy costs remain unpassed and a ₹42 cr prudential provision hit the bottom line.
• Order book reset is mechanical, not a warning: The FY27 order book dropped from ₹2,200 cr to ₹1,550 cr because the earlier figure was incremental for FY26 and has been executed; the residual is now shown for FY27.
• Export pivot is the margin story: Management expects the export mix to rise above 40% over two years, and because export realizations are "always highly remunerative," this is the primary lever for margin expansion.
• Capex holiday begins, debt reduction takes priority: FY27 capex capped at ₹300–400 cr (including ~₹50 cr JV contribution), with a target to cut debt by ₹400–500 cr.
• What to watch next quarter: Whether energy price pass-through is secured from 1 April, the pace of cold forging approvals, and the rail wheel JV's commercial production start.

Margin Walk & Profitability

• Q4 margin jump: EBITDA margin rose to 17.1%, up ~220 bps QoQ, driven by a better product mix in the second half of the year.
• Energy costs are the open wound: Raw material (steel) passes through with a one-quarter lag, but gas and other energy price increases have not yet been passed on. Management has invoked force majeure clauses and says discussions are in an advanced stage, with any relief effective from 1 April onwards.
• The prudential provision: A ₹42 cr ECL provision was taken against electricity duty income recognized as exceptional income last quarter, reflecting caution around the current economic scenario and global volatility. The amount is "totally receivable."
• Consolidated PBT drag: Consolidated PBT was hit by ~₹10.4 cr from elimination of ₹5.9 cr subsidiary profit and a ₹4.5 cr loss from the Mexico subsidiary.
• Margin floor, not a ceiling: Management says the Q4 margin is "here to stay" and should improve by at least 100–150 bps, but that depends entirely on energy pass-through.

Naresh Jalan: "We have not yet been able to pass on the energy price increases. We already are in discussions, and I think discussions are in advanced stage. So, beyond that I think it is very difficult for us to say anything that whether by when we will be able to get."

Export Recovery & Mix Shift

• The export margin premium: Export realizations are always much better than domestic, and the export share fell in FY26 versus the prior year, which depressed blended realizations. As exports recover, overall realization and margins will improve.
• North America Class 8 trucks turning: Warehouses have been destocking for three months; management expects fresh revenues to begin this quarter in a significant manner, with demand sustaining at least through Q3 of calendar 2027.
• Energy storage orders: A ₹250-odd cr order book has been won from companies in the North American energy storage market, where devices require substantial forgings and castings.
• CV order wins tilted export: Of the ₹323 cr in CV orders won, more than 50% is export.
• Two-year mix target: Management expects the export mix to rise above 40% of volumes over the next two years, and margins to improve considerably over the next eight quarters.

Naresh Jalan: "export is always highly remunerative than the domestic market. So, we are very confident with the current order book and with whatever is playing around in terms of the overall global market and the demand side, we are very confident that our margins also will considerably improve going into coming quarters."

Capacity & Utilization

• Utilization drop is denominator math: Forging utilization fell to ~70% (from 83% YoY) because new capacity, including an 8,000-ton press line, expanded the base. Management targets ~80% overall utilization this year, reaching 80–85%+ by Q3 or Q4 FY27.
• Press plant ramp: The press plant is expected to hit ~85% utilization by FY27 year-end.
• Cold forging stuck on approvals: Utilization is at just 40% because approvals are mainly for the passenger vehicle sector and are taking longer in global markets. Management hopes to reach 75–80% by this year-end but cannot put a timeline on when approvals will arrive.
• Casting nearing full tilt: Management expects 85–90% utilization in casting over the coming quarters, reaching close to full utilization by H1 FY27, though Q1 may not yet show it as samples and approvals take time.
• Ring-rolling at 121%: The ring-rolling line has historically operated above 100% without affecting equipment life, and no capacity increase is planned this financial year.

New Business Lines & Order Wins

• Q4 order intake: ₹594 cr of new orders secured with a 4-year program life, split 56% auto (₹334 cr) and 44% non-auto (₹258 cr energy, ₹2 cr off-highway).
• Aluminium forging goes live: Bulk supplies to EV equipment manufacturers globally have commenced post-commissioning, with margins of 14–15% on ₹400 per kg, making the contribution much higher than the current business.
• Rail wheel JV imminent: Commercial production is expected to start by end of May or June, with 40,000 wheels to be supplied in FY27. The 300 trial wheels for approval will be submitted in June/July, but production begins immediately without waiting for approval. Management gave a rough revenue range of ₹400–450 cr for the wheel plant.
• Railway share rising: The railway business grew to 7.5% of revenue (from 4.6% a year ago), and management is targeting a double-digit revenue share from railways this year.
• Trailer axle ambition: The company aims to nearly double this business to ₹250 cr and capture ~10% market share in FY27.
• Aerospace exploration, no revenue yet: The company is exploring capacity for titanium and other stainless-steel products and is in talks with OEMs globally and in India, but has no contract with realistic numbers yet. Any revenue is not expected before FY29.

Naresh Jalan: "I think Class 8 trucks are very, very strong right now. I think since last 3 months, we are seeing destocking happening in our warehouses in North America. And I think we are looking at fresh revenues coming in from this quarter onwards from North America Class 8 trucks in significant manner."

Capital Allocation & Balance Sheet

• Capex holiday declared: FY27 capex is capped at ₹300–400 cr maximum, including a ~₹50 cr JV contribution. The focus is consolidation, with no FY28 capex plan yet frozen as the company is still gathering customer feedback.
• Debt reduction target: Management aims to reduce debt by at least ₹400–500 cr in FY27.
• Shipping cost headwind: Shipping costs have risen 15–20% and transit days have increased by 15–20 days, though floating inventory remains in line.

Naresh Jalan: "this year we are looking at more of consolidation... we are not looking at capex of more than Rs. 300 to Rs. 400 crores maximum... And most of our thrust will be in terms of debt reduction."

Realization & Mix Dynamics

• Realization decline explained: Realization of ₹1 lakh per ton was affected by declining raw material prices through the year versus FY25. A better product mix in H2 helped offset some of the commodity-driven decline.
• Export mix as the realization lever: Because export realizations are structurally higher and the export share fell in FY26, the planned export recovery will lift blended realization.
• EV segment performing: The EV segment is doing well both domestically and overseas, and management has already guided for 10% of revenue from the passenger vehicle segment (synonymous with EV) in two years.

Guidance & Commitments

Key Metrics