Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ramkrishna Forgings Ltd (BOM:532527, Financial) reported a year-on-year revenue growth of 16% for Q4 FY24.
- The company achieved its highest-ever export sales in Q4 FY24, amounting to INR400 crore.
- Net profit after tax for Q4 FY24 increased by 31% year-on-year to INR87.3 crores.
- The company secured a significant contract worth USD220 million, enhancing its global footprint.
- Board approval was obtained for commencing manufacturing and supply operations in Mexico, expanding market reach.
Negative Points
- Revenue was negatively impacted by INR20.75 crore due to the Red Sea issue, with ships stuck in the channel.
- Freight costs increased by INR17 crore in Q4 FY24 due to rerouting caused by the Red Sea issue.
- Domestic revenue saw a decline sequentially, attributed to a slowdown in the commercial vehicle market.
- The company faced challenges with the ramp-up of JMT Auto due to equipment and infrastructure deterioration.
- The Red Sea issue is expected to continue affecting freight costs until resolved.
Q & A Highlights
Highlights of Ramkrishna Forgings Ltd (BOM:532527) Q4 FY24 Earnings Call
Q: Is there any restructuring of the cost? Because raw material gross margin seems to be very different quarterly, and the entire cost seems to be shifted to other expenses. Is there any restructuring?
A: No, there is no restructuring. The increase in export percentages has led to a higher underlying cost in exports compared to the domestic market. This shift has impacted the raw material numbers and other expenses due to increased freight costs. (Lalit Khetan, CFO)
Q: Can you quantify the onetime impact of freight cost or Red Sea impact?
A: The Red Sea issue has led to higher freight costs, which we are discussing with customers to realize some part of it. The impact will rationalize by about 10% to 15% going forward. (Naresh Jalan, Managing Director)
Q: What is the outlook on the three subsidiaries recently merged with?
A: Multitech Auto is performing better with a 200-basis-point improvement in margins. JMT Auto will start production from May, expecting INR100 crores to INR150 crores top line. ACIL has started manufacturing, aiming for INR120 crores of sales this year. (Naresh Jalan, Managing Director)
Q: Can you share the current revenues from the PV segment and expected revenues from new order wins over the next two to three years?
A: Currently, PV is close to 2% to 2.5% of revenue. We expect it to reach double digits in the next two years with the current order wins. (Naresh Jalan, Managing Director)
Q: What is the timeline for the Vande Bharat order of INR270 crore?
A: The order will be supplied within the next two financial years, with the first batch of serial production starting by December this year. (Lalit Khetan, CFO)
Q: What is the expected CapEx for the upcoming year?
A: We are looking at almost INR400 crores-plus of CapEx this year, including standalone RKFL, Mexico venture, and brownfield activities. (Naresh Jalan, Managing Director)
Q: How do you see the share of light vehicles going up in the medium term?
A: We expect the share of light vehicles to reach double digits in the next two years, with sustained profitability similar to current levels. (Lalit Khetan, CFO)
Q: What is the expected peak revenue from the cold forging capacity?
A: We expect full production and utilization in FY26, with peak revenue of almost INR250 crores. (Lalit Khetan, CFO)
Q: How are you looking at reducing net debt?
A: We have given guidance for FY25 and '26, and we stand by it. (Lalit Khetan, CFO)
Q: What is the expected mix of domestic and export revenue in the next three years?
A: We are looking at a 50:50 mix for export and domestic revenue, with export margins expected to improve by 100 to 200 basis points. (Naresh Jalan, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
