Ramkrishna Forgings expects strong demand through FY27, targeting exports to exceed 35% of revenue. The company is scaling its railway wheel joint venture with Titagarh Rail Systems, with commercial supplies to Indian Railways expected to begin in October.
Detailed Coverage
Ramkrishna Forgings is targeting sustained growth through fiscal year 2026-27, supported by a healthy order pipeline and rising international demand. Following a first-quarter performance that saw revenue and EBITDA grow by over 20% year-on-year, the company is now focused on improving its operating margins, which stood at 18% in the April-June period. Management aims to push these margins back above the 20% mark as business activity gains momentum following the monsoon season.
Export Strategy and Client Diversification
The company is placing a heavy emphasis on its export business, which is projected to account for more than 35% of its total revenue for the remainder of the current fiscal year. To support this, management plans to add over 10 new clients across domestic and international markets, building on the momentum of securing one new customer in the first quarter. This expansion is designed to reduce dependence on specific geographies and product lines, though the final benefit will depend on global economic stability and sustained international demand for forging components.
Railway Wheel Joint Venture Updates
A major focus for the company is its joint venture with Titagarh Rail Systems, which marks its entry into the railway wheel manufacturing segment. The project has moved past the initial trial phase, with the first 300 wheels expected to be delivered to Indian Railways for testing in August. Commercial supplies are scheduled to begin in October, provided all regulatory approvals are secured on time. Ramkrishna Forgings has committed to delivering approximately 45,000 wheels to Indian Railways this financial year.
While the company expects this venture to generate roughly ₹1,500 crore in revenue by FY28, investors should note that margins during the initial scale-up phase are expected to be between 15% and 16%, compared to the 19% to 20% margins projected at full capacity. The success of this capital-intensive expansion will depend on efficient execution and the ability to maintain consistent production quality as volumes ramp up.
Monitoring the transition from trial to full-scale commercial production remains crucial for tracking the company’s ability to meet its long-term margin and revenue goals. Future updates regarding regulatory clearances and the pace of wheel deliveries to Indian Railways will be key indicators for shareholders to watch.