Ramkrishna Forgings targets Rs 500 crore FY27 debt reduction

Ramkrishna Forgings Limited targets a Rs 500 crore debt reduction in FY27 after reducing debt by Rs 126 crore in H1 FY27, with management guiding for gross debt of Rs 1,670 crore to Rs 1,700 crore by year-end and annual finance-cost savings of about Rs 40 crore from the planned repayment.

How much debt will Ramkrishna Forgings repay in FY27?

Ramkrishna Forgings plans to reduce debt by Rs 500 crore in FY27, and management said debt had fallen by Rs 126 crore during H1 FY27. That leaves Rs 374 crore of the stated annual reduction to be achieved in the second half, although management did not provide a quarterly repayment schedule on the October 30, 2026 earnings call.

Management clarified that the Rs 500 crore guidance refers to debt net of bill discounting. Gross debt stood at Rs 2,173 crore in March, while debt net of bill discounting was about Rs 2,000 crore. Ramkrishna Forgings therefore expects net debt of Rs 1,500 crore at the end of FY27, while Chief Financial Officer Lalit Khetan guided for gross debt of Rs 1,670 crore to Rs 1,700 crore.

The gross-debt guidance implies a reduction of Rs 473 crore to Rs 503 crore from the March balance of Rs 2,173 crore. This range is broadly consistent with the stated Rs 500 crore FY27 debt-reduction guidance, but the company uses a separate net-of-bill-discounting measure for its Rs 1,500 crore year-end target.

What interest savings does Ramkrishna Forgings expect from repayment?

Ramkrishna Forgings expects the planned Rs 500 crore FY27 debt reduction to lower annual finance cost by about Rs 40 crore. Khetan said the company is paying interest of about 8%, which is the rate management used to describe the expected saving from completing the repayment.

Management did not provide a revised annual or quarterly finance-cost forecast after the repayment. It also did not identify how much of the expected saving would arise from term loans, working-capital borrowings or bill discounting, despite distinguishing between gross debt and debt net of bill discounting.

The repayment plan follows a higher Q2 FY27 operating profit. Consolidated earnings before interest, tax, depreciation and amortisation, or EBITDA, excluding other income, rose to Rs 256 crore from Rs 218 crore in Q1 FY27 and Rs 123 crore in Q2 FY26. EBITDA margin increased to 18.23% from 17.96% sequentially and 13.5% a year earlier, while profit before tax was Rs 95 crore versus Rs 65 crore in Q1 FY27.

What is Ramkrishna Forgings targeting for FY28 debt reduction?

Ramkrishna Forgings aims to reduce a further Rs 300 crore to Rs 400 crore of debt in FY28, according to Khetan. Management presented this as an aim and did not disclose a FY28 gross-debt target, a net-debt target or a repayment timetable.

Management described both domestic and international markets as strong for FY28 but declined to quantify expected revenue growth. Managing Director Naresh Jalan said the company would provide guidance after full-year results, while stating that management saw strong visibility over the next six months from the October 30 call.

Exports provide part of the operating context for that outlook. Ramkrishna Forgings reported Q2 FY27 exports of Rs 424 crore, compared with Rs 277 crore in Q2 FY26. Management said Europe accounted for about 41% of its geographical mix, compared with 28% two years earlier, while North America accounted for about 58%.

Can Ramkrishna Forgings cut debt while spending on capital expenditure?

Ramkrishna Forgings expects group capital expenditure of about Rs 550 crore in FY27 while retaining its Rs 500 crore debt-reduction target. Management said capital expenditure was nearly Rs 390 crore through H1 FY27 and indicated about Rs 160 crore of spending in H2, mainly on machining and value-addition capabilities.

The company had also invested Rs 40 crore in its joint venture through H1 FY27. Management said a further Rs 50 crore to Rs 55 crore of joint-venture investment remained pending over the next year, including Rs 15 crore to Rs 20 crore in the second half of FY27 and the balance in the following financial year.

Management did not disclose the funding mix for the remaining FY27 capital expenditure, joint-venture investment and planned debt reduction. It said the additional spending reflected ongoing investment in machining and value-addition capacity after prior forging-capacity augmentation, rather than announcing another forging-capacity programme.

What business developments could support Ramkrishna Forgings’ repayment plan?

Ramkrishna Forgings said higher capacity utilisation, product mix and operating efficiencies helped lift Q2 FY27 EBITDA margin to 18.23%. Its aluminium forging and cold forging lines were operating at more than 50% utilisation, and management said it was adding customers to raise utilisation further.

The company expects H2 FY27 to be better than H1 after Q2 revenue rose 15.5% sequentially to Rs 1,405 crore from Rs 1,217 crore in Q1 FY27. Revenue was also 54.9% above Rs 908 crore in Q2 FY26, while Q2 profit after tax reached Rs 71 crore and was 47% higher sequentially.

Cost pressures remain relevant to the path from operating profit to debt repayment. Management put the Q2 FY27 net impact of shipping costs at Rs 8 crore to Rs 9 crore after partial customer pass-through. It also said higher raw-material prices created a negative carry of Rs 6 crore to Rs 7 crore in export business because Indian steel prices rose more than prices in relevant export markets.

Conclusion

Ramkrishna Forgings has set out a quantified deleveraging path of Rs 500 crore in FY27 followed by an aim of Rs 300 crore to Rs 400 crore in FY28. The H1 FY27 reduction of Rs 126 crore, the FY27 gross-debt range of Rs 1,670 crore to Rs 1,700 crore and the estimated Rs 40 crore annual finance-cost saving are the key management benchmarks for assessing delivery.

The next disclosures to watch are the balance of the Rs 374 crore implied H2 FY27 debt reduction, the planned Rs 160 crore of second-half capital expenditure and management’s post-full-year guidance. Ramkrishna Forgings also said its Rs 447 crore of Q2 FY27 casting orders included Rs 272 crore for North American light-vehicle applications, where regular supplies are expected after six to nine months of development and validation.