Dolat Capital is bullish on Ramkrishna Forgings has recommended buy rating on the stock with a target price of Rs 640 in its research report dated May 27, 2019.
Dolat Capital's research report on Ramkrishna Forgings
Ramakrishna Forgings (RMKF) 4QFY19 revenue was broadly in line with our estimates. EBITDA margin contracted by 68bps on YoY basis to 20.2%, due to a negative operating leverage, while PAT was suppressed by a higher depreciation and interest cost. The company is aspiring for higher growth in the export markets, which will offset the weak industry growth domestically. Also, the management has learnt from the past and is taking steps to keep debt levels under check. Thus, the company is executing its capex in a calibrated manner – announced capacity expansion (capex of `4-5bn / +50k MT) will now be incurred in phases, which will keep gearing at the existing levels (0.9X).
We recommend a BUY rating, with a TP of ` 640 (based on 14x FY21E EPS).
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