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Engineering
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manufacturing
Automotive
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Oil & Gas
Steel Plants
2. R K FORGING (Mcap 4040cr)
- Engine and axle body component manufacturer
- Products: rolled, forged, machined
- Applications: Automotive, earth moving, mining, farm equipment, railways, oil & gas, steel plants
Details below 👇
1/7
- Engine and axle body component manufacturer
- Products: rolled, forged, machined
- Applications: Automotive, earth moving, mining, farm equipment, railways, oil & gas, steel plants
Details below 👇
1/7
Business Highlights
- Rev mix: 81% Auto (50% MHCV, Balance 50%: Class 8, LCV, sub 9T), 6.5% MHE & Mining, 1.7% Railways, 1% Oil & Gas
- Domestic: Export – 60:40, target 50:50
- Export break up: 61% Asia, 25% N America, 14% EU
- Capacity utin at 82%
- EV contribution at 2%
2/7
- Rev mix: 81% Auto (50% MHCV, Balance 50%: Class 8, LCV, sub 9T), 6.5% MHE & Mining, 1.7% Railways, 1% Oil & Gas
- Domestic: Export – 60:40, target 50:50
- Export break up: 61% Asia, 25% N America, 14% EU
- Capacity utin at 82%
- EV contribution at 2%
2/7
Other Highlights
- Debt to reduce from 1225cr to <300cr by FY25
- Press capacity addn of 56k T, to move from 117k T to 173k T, Overall cap at 243k T
- 50% capacity to be ready by March ’23 and balance 50% by Sept ‘23
- 153cr capex done, 100cr capex in 2HFY23, 50-60cr in FY24
3/7
- Debt to reduce from 1225cr to <300cr by FY25
- Press capacity addn of 56k T, to move from 117k T to 173k T, Overall cap at 243k T
- 50% capacity to be ready by March ’23 and balance 50% by Sept ‘23
- 153cr capex done, 100cr capex in 2HFY23, 50-60cr in FY24
3/7
Key theme
- China +1 and Europe +1
- Focus areas: Railways (OB from 100cr to 250cr by FY24), Farm Equipment in domestic markets, Oil & - Gas in export markets
- Changing rev mix towards less cyclical segments
- Make in India for the world
4/7
- China +1 and Europe +1
- Focus areas: Railways (OB from 100cr to 250cr by FY24), Farm Equipment in domestic markets, Oil & - Gas in export markets
- Changing rev mix towards less cyclical segments
- Make in India for the world
4/7
Client Highlights
- Tata Motors contribution at 43% of domestic sales, 25% overall
- Ashok Leyland + Eicher at 10%+ each
- DANA & Meritor: 75-80% of N. America mkt and 70-75% of EU mkt – 25-30% overall
5/7
- Tata Motors contribution at 43% of domestic sales, 25% overall
- Ashok Leyland + Eicher at 10%+ each
- DANA & Meritor: 75-80% of N. America mkt and 70-75% of EU mkt – 25-30% overall
5/7
Key moniterables
- Rev gr guidance: 22-25% CAGR
- Margin guidance: 22-24%
- Debt reduction (Debt free by end FY25)
- Utilization scale up in new capacity, realization growth, volume growth
- decrease in MHCV contribution
- railways & off highway segment growth
6/7
- Rev gr guidance: 22-25% CAGR
- Margin guidance: 22-24%
- Debt reduction (Debt free by end FY25)
- Utilization scale up in new capacity, realization growth, volume growth
- decrease in MHCV contribution
- railways & off highway segment growth
6/7
Valuations & View
- Potential to grow earnings at >40% CAGR
- Available at <10x FY24E earnings
- Rev growth guidance, superior margin profile, debt free tgt can re-rate the stock
Even if co achieves 75-80% of its guidance, stock can be a multibagger
DO YOUR DUE DILIGENCE
7/7
- Potential to grow earnings at >40% CAGR
- Available at <10x FY24E earnings
- Rev growth guidance, superior margin profile, debt free tgt can re-rate the stock
Even if co achieves 75-80% of its guidance, stock can be a multibagger
DO YOUR DUE DILIGENCE
7/7
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