RK Forging - Q1 FY22 Result Update - YES Securities

(Not Rated)

Healthy demand outlook for auto/non auto segments - positive read through for BHFC

- Result exceeded street expectations. Revenues declined 20% QoQ to Rs4.1b (cons Rs3.5b) as fall in tonnage at 21.9k tons offset by better ASPs at Rs188.5k/ton (+12.5%) due to product mix.

- EBITDA margins expanded 230bp QoQ to 23% (cons 17%) helped by better mix. PAT declined 31% QoQ at Rs246m, due to higher interest and depreciation.

Call highlights

- CV - Expect strong demand from domestic, Europe and NA markets for FY22/23. European truck market registrations are expected in be +18% in CY21 (v/s -27% in CY20).

- Domestic non-auto - Have made an entry into domestic mining segment with revenues potential of Rs40-45cr in FY22 but to grow healthy in FY22/23. On-track to do non auto domestic revenues of Rs3b by FY23.

- EV - Already started working with EV OEMs and have started getting orders from EV. Got an order for domestic EV OEM in 1QFY22.

- Net debt at Rs11b. Looking at debt reduction by Rs0.7-1b in FY22.

View - Improving demand outlook both at auto/non-autos and new wins in railways/mining segment would further help improve utilizations and margins. Exports focus players like BHFC (29x FY23 bloom EPS) and RK Forge (18x FY23 bloom EPS) are expected to benefit too from PLI scheme. Not rated

Shares of RAMKRISHNA FORGINGS LTD. was last trading in BSE at Rs. 823.7 as compared to the previous close of Rs. 817.35. The total number of shares traded during the day was 25644 in over 1846 trades.

The stock hit an intraday high of Rs. 848.65 and intraday low of 820. The net turnover during the day was Rs. 21318346.

Source : Equity Bulls

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