Khambatta Securities has given Buy recommendation for Ramkrishna Forgings with a target price of Rs. 1419 in its research report issued on Oct 18, 2021

Khambatta Securities’ research report on Ramkrishna Forgings

Ramkrishna Forgings Ltd (RKF) has reported strong set of numbers for the quarter with a top-line growth of 130% y-o-y. The Operating Revenue stood at ₹ 57,882 lakhs for the 2Q FY22 as compared to ₹25,202 in the same quarter last year. The EBITDA has seen a 188% jump on a y-o-y basis at ₹13,107 lakh for quarter ended September 2021. Sequentially the Operating Revenue and EBITDA have seen a growth of 37% each signalling relatively stable operating costs for the company. The EBITDA Margins have improved by 457 bps y-o-y and a marginal decline of 10 bps Q-o-Q. The Net Profit has witnessed a significant growth in the quarter. The PAT stood at ₹4,406 lakhs and ₹145 lakhs for 2Q FY22 and 2QFY21 respectively. The PAT margins jumped by 700 bps to 7.6% during the 3 months ended September 21. The company has achieved an Export turnover of ₹ 28,673 lakh in 2Q FY22 as compared to ₹11,390 lakh in 2Q FY21 registering a growth of ~152%.

Outlook

Assigning a target multiple of 16.0x FY24E EPS, our valuation generates a price target of ₹ 1,419, informing a BUY rating with an upside potential of 18% from the current levels.

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