RK Forgings up 8.5%

RK Forgings is doing pretty well today on the back of its earnings call on Wednesday (call transcript was released yesterday) wherein the management has given a very optimistic outlook for the future.

For Q1FY25, the company posted a 4% (YoY) growth in revenue at Rs.868 crore on which net profit came in at Rs.73 crore v/s Rs.77 crore.

Its EBITDA margin stood at 23.1%, adjusted for impact of one-off expense of Rs.17.5 crore as compared to 22.4% in Q1 FY24. The EBITDA margin expanded by 70 basis points year-on-year.

The management said that it is confident of sustaining margins of approximately this 23% plus for the forthcoming quarters. Its expects positive trends across different areas including freight movement, freight rates and activity in industry cement and iron ore sectors. Major projects like dedicated freight corridors are also expected to boost sales of commercial vehicles. With government finances improving and focus on growth related programs, company expects a good order inflow.

The company has a visibility of new order inflow of Rs.526 crore during the quarter from North America, of which CV contains Rs.201 crore; LV IRs. 109 crore and EV Rs. 16 crore and balance is non-auto that is Rs.200 crores from North America.

In Europe it has got an order inflow of Rs.287 crore and that's mostly from the CV, EV was only miniscule 1% of that. In India, it has an inflow of Rs.442 crore from the CV side and Rs.284 crore from the railway side.

The market has reacted positively to this news; the stock, which had closed yesterday at Rs.847.65, opened lower at Rs.840 but with interested buying coming in, the stock rose to an intraday at Rs.918.70, up 8.5%. Its 52-week high is at Rs.998.35.