Ramkrishna Forgings: PAT growth of 38% & revenue growth of 27% for 9M-24 at a 32 PE
RKFORGE has a track record of solid growth with FY04-23 PAT CAGR of 31% & Revenue CAGR of 27%. Outlook of 15-20% volume growth till FY25. Targeting EBITDA margin expansion from 22%+ to 25%
1. 2nd largest forging player in India
ramkrishnaforgings.com | NSE: RKFORGE
Product Portfolio
2. FY04-23: PAT CAGR of 31% & Revenue CAGR of 27%
FY21-23: PAT CAGR of 246% & Revenue CAGR of 57%
3. FY23: PAT up 25% & Revenue up 38%
4. Strong H1-24: PAT up 36% & Revenue up 23% YoY
5. Strong Q3-24: PAT up 42% & Revenue up 36% YoY
PAT up 6% & Revenue up 8% QoQ
6. Strong 9M-24: PAT up 38% & Revenue up 27% YoY
7. Business metrics: Strong return ratios
8. Strong outlook: Growth CAGR of 15-20%
i. Growth CAGR of 15-20% for FY23-26
we are looking at growing in terms of 15% to 20% volume year-on-year continuously for next three to four years' time. The visibility and the landscape we have created for ourselves, we are very confident to have 15% to 20% volume growth.
The above figures are estimates on current commodity prices and there can be upward or downward movements depending on commodity prices and market movements
ii. EBITDA margin expansion to 25% from 22%+
if you see constantly for 16 quarters, we have been maintaining a margin of 22% and above and I think very slowly but steadily we are working towards our goal of 25%
I can very safely say that we aspire to be 25% plus EBITDA margin making Company, while we will be able to safely maintain the current margin trajectory going forward.
iii. Orders in place to support revenue guidance
9. PAT growth of 38% & Revenue growth of 27% in 9M-24 at a PE of 32
10. So Wait and Watch
If I hold the stock then one may continue holding on to RKFORGE
Based on 9M-24 performance, RKFORGE looks on track to deliver the strongest PAT in FY24
RKFORGE is in the middle of a strong run and has delivered sequential QoQ growth in top-line & bottom line in all the three quarters of FY24
The roadmap of 15-20% volume growth till FY26 provides a reason to continue with RKFORGE
11. Join the ride
If I am looking to enter RKFORGE then
RKFORGE has delivered PAT growth of 38% and revenue growth of 27% in 9M-24 at a PE of 32 which makes the valuations fairly valued in the short term.
The long term past track record of FY04-23 PAT CAGR of 31% & Revenue CAGR of 27% makes the valuations at a PE of 32 quite attractive for the longer-term
With a volume growth outlook of 15-20% and EBITDA margin expansion from 22% to 25% provides opportunities in RKFORGE over the longer term as one can expect for 20%+ earnings growth over the long term.
One may not see opportunities in RKFORGE in the short-term at a PE of 32. Additionally one can see a reaction in case of a weak quarter given that the PE is 30+
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