Ramkrishna Forgings (RKFORGE) Q4 05/06 earnings summary

Executive summary

• FY06 marked strong growth alongside a shift from forged blanks toward machined, higher-value automotive components and integrated manufacturing.

• Production rose 23.9% to 13,410 tonnes; capacity additions, improved quality and efficiency supported growth despite higher input costs and complex CNC commissioning.

Financial highlights

• Net revenue increased 24.92% to Rs. 92.81 cr from Rs. 74.29 cr; turnover rose 27% to Rs. 107.67 cr from Rs. 84.39 cr.

• EBITDA before extraordinary items was Rs. 19.14 cr versus Rs. 10.19 cr, up 87.83%; management cited EBITDA growth of 55% on its comparison basis, from Rs. 12.32 cr to Rs. 19.12 cr.

• PAT rose 28.44% to Rs. 8.51 cr from Rs. 6.63 cr; cash profit increased to Rs. 12.82 cr from Rs. 10.22 cr.

• Export revenue grew 78.49% to Rs. 8.92 cr from Rs. 5 cr; domestic revenue increased to Rs. 83.90 cr from Rs. 69.29 cr.

Outlook and guidance

• Targeted Rs. 500 cr turnover by FY09 through organic expansion, product diversification, wider geographic reach, exports and potential acquisitions.

• Planned ~Rs. 60 cr investment in a fully automated ring-rolling line in FY07, alongside heat-treatment and grinding facilities to expand finished-component capacity.

• Expected to move into finished usable products for OEM assembly lines and deepen the machining portfolio; management anticipated further gains in profitability and global reach.