Ramkrishna Forgings aims for 25% margin in two years
In an exclusive interview with CNBC-TV18, Ramkrishna Forgings Managing Director Naresh Jalan, said, “In terms of topline, the company will continue to look at 15-20 percent growth year-on-year."
Ramkrishna Forgings’ shares were trading nearly 4 percent higher on July 24, a day after the automotive components manufacturer reported a 63 percent jump in its net profit at Rs 76.97 crore during the June quarter, on account of higher income.
The firm’s total income rose to Rs 835.95 crore from Rs 650.75 crore in the year-ago quarter, posting a rise of 28 percent.
In an exclusive interview with CNBC-TV18, Ramkrishna Forgings Managing Director Naresh Jalan, said: “In terms of topline, the company will continue to look at 15-20 percent growth year-on-year. We are building capacity and a stable way and using more of the free cash flow available with the company to augment this capacity rather than taking on debt to grow ”
He said that the firm’s capacity utilisation was at 83 percent for existing plants and it added additional capacity in the first quarter of the fiscal year. For the second quarter, it expects to add 22,000 tonnes of capacity and a total of additional 70,000 tonnes in the 2023-24 fiscal. The bulk of the capacity expansion will be done by FY24, Jalan said.
Ramkrishna Forgings is looking at a volume growth of 15-20 percent for the full year. According to Jalan, the current market shows an extremely robust status and both in terms of exports and domestic, there is a lot of traction. “So, we feel that we will be able to maintain the guidance,” he said.
Jalan added that this year, the firm is looking at almost 5 percent of revenue coming from railways.
Reflecting on margin, Ramkrishna Forgings MD said the firm was in a stable margin regime and will be able to maintain these with the traction in the volumes coming in. “We expect at least 50-100 basis points for the whole year to do better than what we have done this quarter or previous year,” he said.
“Our estimation is to touch 25 percent margins in two years and that is what we are working on standard and the acquisitions we have done is to aim for those numbers,” Jalan said.
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