Ramkrishna Forgings Limited

Industrials — Metal Fabrication · NSE

₹692.80+₹14.70 (+2.17%)

DalalBaazaar Score

38 / 100

🔴 Weak

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Ramkrishna Forgings Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Ramkrishna Forgings Limited engages in the manufacture and sale of forged components for automobiles, railway wagons and coaches, and engineering parts in India and internationally.

IndustryMetal Fabrication

SectorIndustrials

Employees3,180

Annual revenue₹3,854 Cr

How does it make money?

Turns over ₹3,854 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹15 left at the operating level before interest, tax and depreciation. Each of its 3,180 employees supports ₹1.21 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin15.0%

Net margin1.9%

Revenue / employee₹1.21 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, HINDALCO INDUSTRIES LTD, VEDANTA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

HINDALCO INDUSTRIES LTDP/E 12.3x · ROE 12.0%

VEDANTA LIMITEDP/E 10.4x · ROE 18.7%

What is its competitive advantage?Little sign of one

Returns on capital of 4.7% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE4.7%

ROE2.2%

Peer median ROE18.7%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 8.0% and earnings to grow about 32.7% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+8.0%

Est. earnings growth+32.7%

Analysts3

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +35% while net margin moved -79% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+35%

Margin effect-79%

DalalBaazaar Score

38/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ ROE of 2.2% is weak
✗ ROE has fallen by 16.6 points over the period

Quality vs. Valuation

Company Quality

37/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

26/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

119.0x

3Y Median

44.8x

40 monthly readings · mean 53.3x · range 20.3x–188.3x

Sector Median

12.2x

median of 4 sector peers

⚠️Current valuation is approximately 166% above its 3y median of 44.8x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 879% above the peer median of 12.2x.

vs. its own history

Expensive

44.8x median over 40 months · +166%

vs. sector peers

Expensive

12.2x median of 4 peers · +879%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

119.0x

P/B

3.81x

EV/EBITDA

26.2x

PEG

—

Dividend Yield

0.14%

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 23.2% to 15.0% over 3 years.
Debt is rising
Total debt is up 84% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 18.8% to 2.2% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 20.4% to 4.7% — often a sign of competition or overexpansion.
Valuation above its historical average
At 119.0x the stock trades 166% above its own median of 44.8x.

Red Flags

6 items require attention · 3 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 84% over 3 years, from ₹1,333 Cr to ₹2,449 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.6x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 8.2 points, from 23.2% to 15.0%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 2.4x to 1.6x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹85 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 71% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 23.2% to 15.0%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 4.2x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 166% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 18.8% to 2.2%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 8% a year✓ 10.5% CAGR
Latest reported year was 19.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 13%✓ 15.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 4.2x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹85 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 1.6x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 4 neutral · 4 weak

Market Cap

₹12,831 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

119.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

3.81x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹5.82

Profitable

Profitable on a per-share basis

ROE

2.2%

Weak

Weak capital efficiency

ROCE

4.7%

Weak

Low return on total capital employed

Debt/Equity

0.74x

Moderate

Moderate leverage

Revenue Growth (YoY)

19.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

289.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.14%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹85 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹692.8

P/E (Forward)

34.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

9.8%

Average

Average margins

Net Margin

2.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.15

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.46

Defensive

Steadier than the market

52W Range Position

74%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

704.5 / 718.1

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

46.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,859 Cr	₹3,339 Cr	₹3,629 Cr	₹3,854 Cr	+10.5%
EBITDA	₹662 Cr	₹745 Cr	₹517 Cr	₹577 Cr	-4.5%
EBITDA Margin	23.2%	22.3%	14.2%	15.0%	—
PAT (Net Profit)	₹248 Cr	₹291 Cr	₹415 Cr	₹72 Cr	-33.9%
EPS	₹15.43	₹17.14	₹22.95	₹3.95	-36.5%
ROE	18.8%	11.1%	13.7%	2.2%	—
ROCE	20.4%	13.3%	5.9%	4.7%	—
Total Debt	₹1,333 Cr	₹1,207 Cr	₹2,126 Cr	₹2,449 Cr	+22.5%
Free Cash Flow	₹389 Cr	₹32 Cr	-₹944 Cr	-₹85 Cr	—

🟢 Revenue has grown at 10.5% a year over 3 years.

🔴 EBITDA has shrunk at 4.5% a year over 3 years.

🔴 EBITDA Margin has fallen from 23.2% to 15.0% over 3 years (-8.2 pts).

🔴 PAT (Net Profit) has shrunk at 33.9% a year over 3 years.

🔴 EPS has shrunk at 36.5% a year over 3 years.

🔴 ROE has fallen from 18.8% to 2.2% over 3 years (-16.6 pts).

🔴 ROCE has fallen from 20.4% to 4.7% over 3 years (-15.7 pts).

🔴 Total Debt has grown at 22.5% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹389 Cr to -₹85 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹7,178 Cr

Total Liabilities

₹3,888 Cr

Total Debt

₹2,449 Cr

Cash & Equivalents

₹162 Cr

Operating Cash Flow

₹840 Cr

Capex

-₹925 Cr

Shareholding (proxy)

Institutional Holding

12.8%

Insider Holding

56.4%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

08 May 2026

Analyst Consensus

Recommendations

0 Buy · 3 Hold · 1 Sell

Target Price (Mean)

₹634

-8.5% vs CMP

Target Range

₹550 – ₹680

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
HINDALCO INDUSTRIES LTD	12.3x	12.0%
VEDANTA LIMITED	10.4x	18.7%

Recent News

4 mixed2 general

Ramkrishna Forgings share price up 34% in 2026; Monarch Networth sees 18% upside with ₹806 target— Here's why

Livemint, 13 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Ramkrishna Forgings Share Price: Monarch Rs 806 Target Why

Univest, 13 Oct

Ramkrishna Forgings (NSEI:RKFORGE) Stock Forecast & Analyst Predictions

Simply Wall Street, 05 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

RKFORGE Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Earnings call transcript: Ramkrishna Forgings posts strong Q1 2027 growth

Investing.com, 24 JulResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Looking for money making shares? Monarch Capital picks Ramkrishna Forgings, TCPL Packaging - up to 20% upside

Livemint, 13 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🔴Business QualityWeak7.5/20

🔴Financial HealthStretched8.1/20

🔴GrowthWeak7.7/20

🔴ProfitabilityWeak4.6/15

🔴ValuationDemanding4.9/15

🟡RiskModerate5/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 8% a year10.5% CAGR
✓EBITDA margin holds above 13%15.0%
✗Debt / EBITDA falls below 3x4.2x
✗Free cash flow remains positive-₹85 Cr
✗Interest cover stays above 3x1.6x