Ramkrishna Forgings Limited Q3 FY25 Earnings Call Summary

Summary

Ramkrishna Forgings Limited - Q3 FY 2025-26 Earnings Call Summary Tuesday, January 27, 2026, 17:00 Hours (I.S.T)

Event Participants

Executives 5 Mr. Chaitanya Jalan (Whole-time Director), Mr. Lalit Khetan (Whole-Time Director and CFO), Mr. Milesh Gandhi (Whole-Time Director), Mr. Naresh Jalan (Managing Director), Mr. Rajesh Mundhra (VP-Finance and Company Secretary)

Analysts 10 Aditya Kumar, Akash, Armaan, Balasubramanian, Devang Shah, Lakshminarayanan, Saket Saurabh, Sunny Gosar, Tanmoy Roy, Tushar Raghatate

Financials & KPIs

Geographic & Segment Commentary

• Domestic Market: Revenue share increased to ~70% as of Q3 FY26. Performance was bolstered by GST rate rationalization in September, which revived automotive sentiment, alongside steady industrial activity and infrastructure demand.
• North America: Revenue declined ~40% in 9M FY26 due to lower Class 8 truck build rates. Management noted the “worst is behind” and expects 10% YoY growth in FY27 driven by new customer additions and recovering fleet utilization.
• Europe: Strategically positioned to benefit from the EU-India Free Trade Agreement (FTA), which will eliminate duties. Currently contributes 30-35% of export sales with increasing interest from CV OEMs as a “China Plus One” alternative.

Company-Specific & Strategic Commentary

• Railway Expansion: Transitioning from component supplier to assembly provider with “Bogie Assemblies.” Management identified an annual market opportunity of ₹2,000 crores within Indian Railways; targeting double-digit revenue share from Railways in next 2 years.
• Forged Wheels JV: Trial production scheduled for end of Q4 FY26 with an obligation to supply 40,000 wheels to Indian Railways in Year 1. Commercial production and export market entry (100,000+ wheels capacity) are slated for FY27/FY28.
• Diversification (PV & EV): Actively de-risking from CV dependence by targeting 10% revenue from Passenger Vehicles (PV) by FY28. Secured ₹18 crores in new EV orders this quarter, primarily from North American OEMs and domestic CV players.
• New Facilities: Aluminium forging commissioned; casting facility and Mexico machining unit under trial runs for Q4 FY26 commissioning. These units are critical for the anticipated 10-15% CAGR over the next three years.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Railways Revenue Participation

• Question: What is the targeted revenue contribution from Railways over 3-5 years? (Balasubramanian)
• Answer: Target is double-digit sales share in 2 years. While Wheel JV revenue won’t be in the RKFL standalone top-line, Bogie Assemblies will drive significant growth (Naresh Jalan).

North America Recovery

• Question: Why has North America declined so sharply and what is the outlook? (Sunny Gosar)
• Answer: Build rates slowed in the past year, but December orders show traction. New customer wins will compensate for losses; FY27 should see a return to normal levels (Naresh Jalan).

Margin Recovery Path

• Question: When will EBITDA margins return to the 19-20% range? (Akash)
• Answer: Management will not commit to a specific date but emphasizes that 14.9% is not the “new normal.” Consistent QoQ improvements are expected as utilization and value-added product mix increase (Naresh Jalan).

Tax/Tariff Impact on Mexico

• Question: Does the Mexico operation face an overhang from potential US tariffs? (Devang Shah)
• Answer: RKFL supplies on DAP basis and has no direct tariff exposure. If tariffs on competitors prevail, the Mexico machining facility becomes more strategically attractive to US customers (Naresh Jalan).

Key Takeaway

Ramkrishna Forgings delivered a resilient Q3 FY26, characterized by 21% sequential revenue growth and a ₹680 crore new order intake, primarily in the domestic market. While North American exports remained soft due to Class 8 build-rate cyclicality, management signaled a turnaround for FY27 supported by new customer PPAPs. Strategically, the company is pivoting toward higher-value assemblies in the Railway segment and aggressively diversifying into Passenger Vehicles (targeting 10% revenue share by FY28) to reduce CV cyclicality. Despite Q3 margins being pressured by rejections and product mix, the commissioning of the Aluminium and Casting facilities, alongside the Rail Wheel JV’s trial production, provides a clear path for the guided 10-15% revenue CAGR. The company remains focused on deleveraging, aiming to bring net debt below ₹2,000 crores by year-end while ramping up new capacity utilization to 80%+.