Ramkrishna Forgings FY26: Q3 takeaways and FY27 cues

What stood out in the Q3 FY26 discussion

Ramkrishna Forgings (RKFL) used its Q3 FY26 commentary to defend its near-term growth guidance while acknowledging operational pressure points. An analyst flagged that the company had delivered around 1% growth in the first nine months of FY26 despite guiding for “double-digit growth” for the full year. Managing Director Naresh Jalan responded that management was still holding to that guidance, implying a steep Q4 ramp would be needed to reach even the lower end of 10%. The call also addressed a sharp North America slowdown, margin volatility, and the company’s strategy to reduce tariff risk through Mexico. At the same time, RKFL highlighted adjacent segments such as Indian Railways and passenger vehicles as medium-term growth drivers. Management maintained a positive outlook for Q4 FY26 and into FY27, supported by capacity utilization and new orders. The company also reiterated plans around deleveraging and utilization improvement.

FY26 growth guidance versus 9M performance

The key debate in the call was the gap between guidance and the year-to-date trend. Management had guided for “double-digit growth” for FY26, while 9M growth was indicated at around 1% in the discussion. Naresh Jalan reaffirmed the full-year guidance in the Q3 FY26 concall. That stance implies that Q4 would need to contribute a disproportionately high growth rate to pull the full year into double digits. The company did not provide a revised quantitative bridge in the provided excerpts. It did, however, tie its confidence to multiple growth levers and a push for higher utilization. Management also indicated it expects improved performance in Q4 FY26 and sustained momentum into FY27. Separately, it projected a 10-15% year-on-year growth trajectory for the next three consecutive years.

Margin pressure and what management blamed it on

RKFL flagged margin pressure at multiple levels. On a standalone basis, gross margin contracted to 45% in Q3 FY26. Management attributed the contraction to product mix and a higher volume of rejections, and it indicated a return to normalcy in Q4. The broader context was margin volatility across years, with EBITDA margin falling from 20.9% in FY24 to 13.9% in FY25, which was linked to inventory correction and high input costs. Management said this was not the “new normal” and guided toward sequential improvement. Naresh Jalan pointed to a longer-term path back to 19-20% EBITDA margins as value-added products scale up in FY26-27. In Q3 FY26, EBITDA margin was stated at 14.9% for the quarter.

Q3 FY26 operating snapshot and order momentum

RKFL described a sequential improvement in scale in Q3 FY26. It said revenues were higher by 21% quarter-on-quarter compared to ₹908 crore in Q2 FY26. EBITDA excluding other income was ₹163 crore in Q3 FY26, compared with ₹126 crore in Q3 FY25, and compared with ₹123 crore in Q2 FY26 on a sequential basis. Profit after tax for the quarter was cited at ₹13.6 crore after an exceptional provisioning for gratuity and leave of ₹10.43 crore due to the new labour code. The company also highlighted fresh order intake in Q3. Management stated that during Q3 it secured new orders worth ₹680 crore with a program life of four years. It said around 66% of these orders were from automotive and 34% from non-automotive segments.

North America slump and the Mexico hedge

Exports, especially to North America, were highlighted as a near-term pain point. Management discussed a 40% year-on-year drop in North America sales for 9M FY26. It said “the worst is behind them” and projected a recovery by FY27. RKFL is also leaning on its Mexico facility to mitigate tariff risks related to the US market. Management noted that 80% of North American exports go through Mexico or Canada and are not impacted by direct US tariffs. The company also indicated that machining operations have begun at its Mexico subsidiary and that it has secured orders from a North American customer. In a separate Hindi excerpt, domestic sales were stated to be up 13% while exports were down 27.5%. This mix shift helps explain why domestic resilience was repeatedly emphasized alongside export caution.

Railways and PV: the next set of growth levers

RKFL repeatedly positioned railways as a major growth pillar. It described the railway segment as the “next level of growth” and pointed to a ₹2,000 crore annual revenue opportunity from bogie assemblies in FY26-27. In Q3 FY26, management also called the railway bogie business high margin-accretive. Separately, the company’s JV with Titagarh Rail Systems won a ₹2,000 crore contract to supply 228,000 forged wheels annually to Indian Railways, with RKFL holding a 51% stake. The Chennai-based facility for this venture is expected to begin operations by January 2026, and as of June 2025, ₹370 crore had been invested. Passenger vehicles were framed as another diversification lever. Management reiterated its target for PV to contribute 10% of total revenue by FY27-28, and it reported new order wins from two domestic and three international manufacturers.

Utilization, leverage targets, and domestic demand signals

Management linked its outlook to improved operating leverage. It said it anticipates 80-85% utilization across capacities by the next financial year. It also stated an intent to reduce debt to below ₹2,000 crore by the end of FY26. In the call, it described confidence in quarters ahead due to growth levers already ramping up and a stronger focus on driving utilization. It also discussed an internal mix expectation, stating a cautious scenario of about 35% exports and 65% domestic in FY27. Another forward indicator cited was an expected 10% year-on-year increase in build rates for FY26-27. The company also referenced GST rate rationalization implemented in September as meaningful in reviving automotive customer sentiment. Lower tax rates and reduced on-road prices were described as supporting a rebound in demand.

Financial datapoints disclosed for Q1 FY26 and FY25

RKFL’s disclosed financials in the provided material include Q1 FY26 and FY25 figures. In Q1 FY26, it reported consolidated revenue of ₹1,015.26 crore and EBITDA of ₹148.61 crore. PAT in Q1 FY26 was ₹11.79 crore, with a PAT margin of 1.2% cited in the text. For FY25, RKFL reported revenue of ₹4,034.11 crore, a 9% year-on-year increase. FY25 PAT was ₹415.03 crore, including exceptional items of ₹81.50 crore, compared with FY24 PAT of ₹291.21 crore. Order wins in Q1 FY26 were also described: ₹660 crore of new orders, including ₹23 crore in railway orders. The material also separately cited new contracts of ₹683 crore in a management remark about Q1.

Key figures at a glance

Orders, investments, and expansion milestones

Why the update matters for investors

The Q3 FY26 message combined optimism on growth with realism on near-term constraints. The reaffirmed double-digit FY26 guidance stands out because the cited 9M run-rate was around 1% growth, raising the bar for Q4 execution. Margins are another focal point, with Q3 standalone gross margin at 45% and management citing rejections and mix as drivers. The longer-range margin narrative is anchored to a targeted return to 19-20% EBITDA margins as value-added products scale up in FY26-27. Exports, particularly North America, remain the key swing factor given the 40% year-on-year decline in 9M FY26, even as management claims the worst is behind. Mexico is being positioned as a structural hedge against tariff uncertainty, supported by the statement that 80% of North America exports are routed through Mexico or Canada. Railways and PV provide diversification, with large addressable opportunities cited and a clear PV revenue share goal by FY28. The next confirmed checkpoints in the story are Q4 FY26 performance, progress on utilization and debt targets, and the January 2026 start timeline for the Chennai rail JV facility.