Ramkrishna Forgings Ltd (RKFORGE) Q1 FY27 Earnings Call: Rs.278 Cr Auto Order Win, Guides 20%+ Export Growth

Ramkrishna Forgings Ltd held its Q1 FY27 earnings call on July 24, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Revenue Crosses Rs.1,200 Cr With Strong Margin Expansion

• Consolidated revenue of Rs.1,217 Cr in Q1 FY 2026-2027, flat QoQ but up 19.84% YoY vs Q1 FY 2025-2026, driven by resilient demand across key markets and a strengthening commercial vehicle ecosystem.
• EBITDA (ex-other income) of Rs.218.47 Cr, up 47% YoY and 5% QoQ; EBITDA margin improved to 17.96% from 17.11% in Q4 FY 2025-2026, a gain of 85 bps QoQ.
• PAT of Rs.46.88 Cr vs Rs.11.74 Cr in Q1 FY 2025-2026, representing growth of 297% YoY; PBT came in at Rs.65.34 Cr vs Rs.23.9 Cr in the prior-year period.
• Gross margin of 54% in Q1 FY 2026-2027, which management termed sustainable and expects to improve further, assuming energy prices do not cross the peak levels seen during the quarter.
• Integration of casting operations substantially completed; management is now focusing on sweating assets through higher utilisation and reducing leverage, with the majority of strategic capex now behind.

Rs.278 Cr Auto Order Win Drives Diversification Across Segments

• Rs.278 Cr in new automotive orders secured in Q1 FY 2026-2027 with a 4-year program life; 82% from passenger vehicles and 18% from two-wheelers (crankshafts from the Gurugram machining facility).
• Rs.15 Cr in new metro orders from Indian Railways during Q1 FY 2026-2027, adding to the non-automotive order book which management noted continues to improve its share.
• Export growth of 20%+ guided for FY 2026-2027, with management citing a healthy order book from North America and Europe and more constructive customer discussions versus a year ago.
• PV order book split ~50% ICE / 50% EV for the domestic market as of Q1 FY 2026-2027, while PV exports are ~100% EV; management expects the 50-50 mix to continue in future sales.
• Rs.228 Cr domestic EV order announced separately (not exports), reinforcing the company's positioning in the electrification transition within the passenger vehicle segment.
• No specific volume growth guidance was provided for the domestic market, but management expects the second half of FY 2026-2027 to be "extremely exciting" due to post-monsoon demand.

Gross Margin at 54% Despite Energy and Shipping Cost Headwinds

• Gross margins expanded 535 bps QoQ in Q1 FY 2026-2027, but EBITDA margins improved only 85 bps QoQ because energy and shipping costs were not passed through to customers.
• Management attributed gross margin expansion to better product mix, not solely to price revisions, and indicated EBITDA margins could improve significantly once energy and shipping costs stabilise.
• Steel commodity costs are pass-through with a one-quarter lag; the impact of Q1 FY 2026-2027 price increases will be reflected in Q2 FY 2026-2027.
• Gas and shipping cost increases are not fully pass-through; management is working with customers on absorption but has no definite answer on full recovery.
• Rupee depreciation is fully hedged and passed on in all contracts; the 1-1.5% depreciation in Q1 FY 2026-2027 did not contribute to margin improvement.
• Management declined to provide a specific margin range for the remaining quarters of FY 2026-2027 or for FY 2027-2028, citing challenging energy prices and shipping costs, but assured continued sequential improvement.

Net Debt Reduction of Rs.500 Cr Targeted for FY 2026-2027

• Net debt of ~Rs.1,900 Cr at end of Q1 FY 2026-2027, improving by ~Rs.100 Cr from Rs.1,990 Cr in Q4 FY 2025-2026.
• Management reiterated guidance to reduce net debt by at least Rs.500 Cr in FY 2026-2027, targeting net debt of Rs.1,500 Cr by end of the fiscal year.
• Total capex guidance for FY 2026-2027 is Rs.350 Cr; the first phase of investment in the rail JV is nearly complete, with an additional Rs.20-30 Cr expected from the company.
• Net debt target of ~Rs.1,000 Cr by FY 2027-2028, with management keeping leverage in check and no major capex announced before the end of FY 2027-2028 pending clear order book visibility in aerospace and other new verticals.
• FY 2025-2026 operating cash flow (post working capital) reached a record ~Rs.840 Cr, and management set internal targets for FY 2026-2027: reduce receivables days by 5-10, inventory days by 5, and increase payables days by 10, for a combined improvement of 15-20 days.
• Q1 FY 2026-2027 working capital edged up slightly due to shipping cost increases and longer transit times from the West Asia crisis.

Railway Wheels, Inconel, and Titanium Shape the Next Growth Phase

• 300 railway wheel samples to be submitted to Indian Railways for testing in August FY 2026-2027; bulk production to commence by September-October FY 2026-2027, subject to successful trials.
• Wheel JV has a confirmed order of 80,000 wheels from Indian Railways for passenger trains, locomotives, and Vande Bharat trains; the JV partner has an obligation of 25,000 wheels, bringing total committed utilisation to 1,10,000 wheels, sustaining manufacturing until end of FY 2027-2028.
• Mexico operations contributed Rs.6 Cr revenue in Q1 FY 2026-2027; significant revenue contribution expected from Q3 FY 2026-2027 onwards.
• Meaningful revenue from Inconel and titanium products expected in at least two years from Q1 FY 2026-2027, with capabilities estimated at 8-10 quarters; capex requirements are minimal at Rs.10-20 Cr primarily for heating arrangements.
• Stainless steel forging expected to begin meaningful contributions from Q4 FY 2026-2027 based on existing order books; the company has commenced bulk supplies of aluminium forgings.
• Zero current exposure to aerospace/defence; management noted it will take two years to build the order book for aerospace, semiconductors, and robotics, with capacities being established in Conal and titanium products.

ROCE Target of 20% Set for FY 2027-2028 Amid Strong Demand Visibility

• ROCE guidance of 12-15% for FY 2026-2027 and a target of 20% for FY 2027-2028, driven by asset sweating and a rising export product mix.
• Export revenue share expected at ~35% of consolidated revenue for FY 2026-2027, marking the highest-ever export revenue for Ramkrishna Forgings.
• Rs.8,000 Cr revenue target pushed from FY 2027-2028 to FY 2028-2029; based on FY 2025-2026 revenue of Rs.4,200 Cr, this implies a CAGR of ~22-25% over three years.
• Capacity utilisation expected to reach ~80% by end of FY 2026-2027, up from current levels; management targets 75-80% utilisation before committing to the next major capex cycle.
• Ring rolling capacity utilisation at 125% and expected to remain at peak for the next two to three years; no capacity additions are planned for this line.
• Key downside risks include geopolitical issues causing shipping delays (increasing working capital pressure) and potential escalation in energy prices, a major cost component in forging operations.