Ramkrishna forgings hosted a conference call on October 11, 2021. In the conference call the company was represented by Mr. Naresh jalan- Managing Director and Mr. Chaitanya jalan- whole time director

Key takeaways of the call

Company marked its presence in EV segment by winning its first EV contract. Management believes it is well placed to capitalize on EV market.

Going forward, company expects the overall growth to continue supported by recovery in the domestic automotive markets and sustained improvement in exports.

Company has added customers in Europe and North America and started supply to South America. Company expects to add more customers.

Company's capacity increased to 1,87,100 tons per annum, which marked end to its capex cycle.

During the quarter ended sept 2021, company added new customers and is confident about getting repeat orders from them.

Company has received contracts worth Rs 620 Crore from 8 contracts during the quarter from various geographies and business verticals.

New orders received by the company are mostly from Europe.

In Q2 FY22, company derived 81.31% of total revenue from Auto and 18.69% from others. Based on geography it derived 51.5% of total revenue from domestic sales, 35.5% from exports to north America, 12.5% from exports to Europe and 0.4% from exports to others.

In H1 FY22, company derived 80.42% of total revenue from Auto and 19.58% from others. Based on geography it derived 49.9% of total revenue from domestic sales, 36.2% from exports to north America, 13.4% from exports to Europe and 0.5% from exports to others.

Company has taken price hike of Rs 5.9 on steel in this quarter.

In terms of LCV, company is doing well in North American market. LCV contributes around 5% of total sales to the company.

In terms of exports management expects momentum to continue.

Management expects margin to sustain at around 24%, driven by initiatives taken by the company post covid lockdown.

In H1 FY22 capex outflow was Rs 150 crore. Management expects small capex of Rs 25-30 crore in remaining FY22.

Capacity utilization during Q2 FY22 was 78.81%.

Company expects its product mix to further improve from here.

Management cautioned that adverse commodity prices could hurt profitability ahead.

Management commentary: Mr. Mahabir Prasad Jalan, Chairman said: “The Company has achieved a turnover of Rs 57,893.59 Lakhs in Q2FY22 in comparison to Rs 25,247.13 Lakhs in Q2FY21 registering an increase of 129.31% YoY and Rs 99,607.12 Lakhs in H1FY22 in comparison to Rs 36,832.00 Lakhs in H1FY21 registering an increase of 170.44% YoY. The Company has achieved an Export turnover of Rs 28,673.78 Lakhs in Q2FY22 comparison to Rs 11,390.78 Lakhs in Q2FY21, registering a growth of 151.73% and an Export turnover of Rs 50,698.79 Lakhs in H1FY22 comparison to Rs 18,006.05 Lakhs in H1FY21, registering a growth of 181.57%. The EBDITA (excl. other income) is also increased to Rs 13,917.94 Lakhs in Q2FY22 in comparison to Rs 4,557.84 Lakhs in Q2FY21 and Rs. 23,449.85 Lakhs in H1FY22 as compared to Rs. 4,408.46 Lakhs in H1FY21. The PAT has also increased to Rs 5,011.20 Lakhs in Q2FY22 from Rs 207.30 Lakhs in Q2FY21 and to Rs. 7,472.49 Lakhs in H1FY22 from Rs. -2,439.89 Lakhs in H1FY21.

With all the capacity expansions in place taking our overall capacity to 1,87,100 tons per annum, we expect to increase our presence in Indian as well as exports markets and deliver new products which might help us to improve our operating leverage and boost our margins With the help of our research and development and various initiatives we can offer improved and premium products to our customer. Our strategy of diversifying our presence in both auto and non-auto segment along with strengthening presence in exports market has been bearing fruits with recent order wins.”

Mr. Naresh Jalan, Managing Director said: “Our company has reported strong results across various business parameters. During the quarter we managed to win contracts across all business segments and entered new geographies thus gaining further grounds on our sector as well as geographic diversification strategy. We have marked our presence in EV segment by winning our first EV contract which a testimony of our technological prowess. Our contract wins in oil & gas segment strengthens our penetration into this sector and is in line with the strategy to diversify its portfolio across sectors and geographies. Looking ahead into second half of FY22, we expect the overall growth to continue supported by recovery in the domestic automotive markets and sustained improvement in exports. Potential impact on OEM production schedule due to semiconductors supply crunch, increase of input costs and freight cost are factors to keep track of in the coming months. Looking at the visibility of the business, we hope the recent recovery in Commercial Vehicle segment continues for the balance period of the year which will enable us to post a strong growth foundation for coming years.”