Ramkrishna Forgings Ltd · NSE:RKFORGE
Ramkrishna Forgings — Q2 FY19 Earnings Presentation
29 slides from Ramkrishna Forgings's earnings presentation, Nov 27, 2018
Slide 1: Fastest growing forgings company in the world's fastest growing economy
ys Fastest growing s forgings company in ri the world’s fastest growing economy T A presentation on Ramkrishna Forgings Limited
Slide 2: Ramkrishna Forgings Limited: founding, mission and core values
ys Ramkrishna Forgings Limited was founded on 12th November, 1981 and became a listed company in 2004. The Company majorly caters to the commercial vehicle segment in the domestic as well as the overseas market and is s also a critical safety item supplier for railway coaches and wagons. ri OUR MISS
Slide 3: How we performed in Q2, FY19
How we performed in Q2, FY19* ys Overview Direct numbers Reasons for improvement • Profitable growth • Net revenues from • More content per vehicle operations increased • Revenues grew faster than 36.4% to Rs 461.47 cr • Revenue growth; better cost economy amortisation • EBIDTA (excluding Other • Re
Slide 4: Q2 FY19 performance: part of long-term improvement (10 quarters)
Q2 FY19 performance: Part of long-term improvement (10 quarters) ys Our performance over the last nine quarters (Rs cr) FY18-19 FY17-18 FY16-17 Particulars Q2 Q1 Q2 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Revenues 461.47 410.48 440.11 398.97 338.22 258.17 280.98 212.12 155.69 217.45 EBITDA 97.87 86.48 91.65 76.83 65.6
Slide 5: Q2 FY19 performance: part of long-term improvement, continued
Q2 FY19 performance: Part of long-term improvement (10 quarters) Continued… ys 500 440.11 410.48 398.97 450 400 338.22 350 280.98 258.17 300 s 217.45 212.12 250 155.69 200 150 ri 91.65 86.48 76.83 65.61 100 50.14 46.56 42.62 40.58 27.16 50 0 T Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18
Slide 6: Retrospective performance of 2016-17 and 2017-18
Retrospective performance of 2016-17 and 2017-18 (Rs cr) ys Particulars 2016-17 2017-18 Revenues 880.91 1435.47 EBITDA 157.82 284.24 EBITDA margin 17.92% 19.80% Debt-equity 2.0 1.1 EPS 3.81 30.15 Reality s • 62.95% growth in revenues Interpretation • Profitable growth ri • 80.10% growth in EBITDA •
Slide 7: Overview of what we are and where we have come from
Overview of what we are and where we have come from ys Statutory Auditors Location S.R. Batliboi & Co. LLP • Headquartered out of Kolkata (A member of Ernst & Young) • Four of five manufacturing facilities in Jamshedpur • Located proximately to key automotive manufacturing hubs • Enjoys logistical a
Slide 8: Overview of what we are and where we have come from: products
Overview of what we are and where we have come from Continued… ys Products Manufactures a range of Products comprise front axle Products used in automotive components components, transmission gears and non-automotive sectors and shafts, rear axle components, crown wheels, bell crank assembly and eng
Slide 9: Overview: equipment distinctiveness
Overview of what we are and where we have come from Continued… ys Equipment distinctiveness Investment Impact Only fully automated ring rolling Used in the manufacture of bevel up to facility in India’s forgings sector 500mm diameter in 25-40 seconds Investment Impact s SCADA press furnace It is a C
Slide 10: Overview: customers (OEMs and Tier 1)
Overview of what we are and where we have come from Continued… ys Customers OEMs Tier 1 s ri T 10
Slide 11: Overview: customers by sector
Overview of what we are and where we have come from Continued… ys Customers General Engineering: Bearings: Railways: Earth Moving & Mining: s Oil & Gas: ri Power & Construction: Steel: Farm Equipments: T 11
Slide 12: The quality of the RKFL management
The quality of the RKFL management ys Trusting sectoral Working in niches Investing in Focused on safety prospects (reflected (continuous focus slowdown (2014-15) first (created a in sustained for the highest prudent funding reinvestment) margin products) structure) s Capitalised on sectoral opportu
Slide 13: Distinctive phases of RKFL
3 distinctive phases of RKFL ys First phase Second phase Third phase 1981: Incorporation of the 2004: IPO launched, becomes a 2014-15: Commissioned 3150T & Company listed entity 4500T press lines 1985: Approved by Indian Railways 2005: Market cap as on 31st March, Mobilised equity from Wayzata; as C
Slide 14: Dynamic third phase (2014-15 onwards)
Dynamic third phase (2014-15 onwards) ys Input Output • Single most decisive investment • Targeted rising revenue share from Medium & Heavy Commercial Vehicle • 12,500 tonne, fully-automated (M&HCV) segment • Equipped to manufacture complex and • Targeted components sale to growing heavy-forged comp
Slide 15: Dynamic third phase: desired impact and financials
Dynamic third phase (2014-15 onwards) Continued… ys Desired impact Financials • Larger throughput • Strengthen margins • Superior manufacturing economies • Enhance RoCE • Higher EBITDA margins • Generate accruals for next growth round • Enhance realisations s • Empower deeper global OEM presence • I
Slide 16: Impact of the third phase
Impact of the third phase ys Strategic Capability • Broadened opportunities through wider • Increase Pressline product tonnage from 30% in customer / product / geographies 2016-17 to 59.50% in 2017-18 coverage • Focus on complex and heavy-forged components • Increased cross-sale opportunities • Exte
Slide 17: Impact of the third phase, continued
Impact of the third phase Continued… ys Market • Enhanced customer base and market share • Strengthened the input-output ratio • Increased content per vehicle • Empowered company to increase its proportion of sales to OEMs and Tier 1 players Financial s • Increased average realisations EBDT ri 90.99
Slide 18: What makes us a differentiated forgings company for customers
What makes us a differentiated forgings company for customers ys Ability to service growing demand Second largest 1,50,000 tons of Robust in-house forgings company in forgings capacity per engineering and India; comfort- annum; ability to metallurgical enhancing service growing needs capabilities; h
Slide 19: What makes us differentiated: digital tools
What makes us a differentiated forgings company for customers Continued… ys Digital tools AutoCAD Unigraphics VeraCAD Commercial Leading CAD/CAE/ Graphically computer-aided CAM software product interactive design design and drafting software for stretch software application roll segments FaroArm s F
Slide 20: What makes us differentiated: capabilities
What makes us a differentiated forgings company for customers Continued… ys Capabilities Engineering and designing of parts as per customer requirement, complete with testing and engineering for newly developed parts Tool and die making facilities Forging facilities utilising belt drop hammers, pneu
Slide 21: Sectoral developments
Sectoral developments ys North American class 8 truck segment: witnessing strong growth • Class 8 truck orders grew 53.2% to 3,49,893 units (January to August of CY17 vs. CY18) • North American Class 8 orders for the past twelve months have now totaled 477,000 units (as of August 2018) US Mexico Exp
Slide 22: Sectoral developments, continued
Sectoral developments Continued… ys Automotive Mission Plan 2016-26 driver Auto industry in GDP Projected capex of End of life policy for Scrappage Policy to increase from US $80 bn old vehicles and like to eliminate <10% to 13% stronger emission 700,000 commercial control to trigger vehicles fresh
Slide 23: Translating strengths into strengthening financials
Translating strengths into strengthening financials ys Total gearing Higher sales FY15: 1.75x FY18: 1.08x FY15: 741cr FY18: 1435cr Net worth Higher EBITDA FY15: 411.11cr FY18: 759.18cr FY15: 134cr FY18: 284cr s Higher EBITDA margins Greater ROCE ri FY15: 18.1% FY18: 19.8% FY15: 12.15% FY18: 16.75% H
Slide 24: Certifications
Certifications ys Plant 1 Plant 2 Plant 3 & 4 • ISO 14001:2015 & BS OHSAS • ISO 9001:2015 • ISO 14001:2015 & BS OHSAS 18001:2007 18001:2007 • ISO 9001:2015 • ISO 9001:2015 • IATF 16949 • IATF 16949 • AS 9100 D • AS 9100 D s Plant 5 Other certificates • ISO 9001:2015 • ISO IEC 17025:2005 • EC Complia
Slide 25: Awards
Awards ys Won ‘Star Performer Won ‘Best run in R&D, Won a certificate of Won ‘Supplier of the Award’ for 2011-12 for Design and New Product appreciation for year' award for 2013, steel forgings from Development’, SAP ACE improvements made in 2015 and 2016 from EEPC Awards, 2012 Safety, Health & SISA
Slide 26: RKFL's preparedness
RKFL’s preparedness ys Engagement with marquee and market-leading customers Engagement with OEMs (direct end customer) Graduation from components to sub-assemblies to assemblies Stronger product mix Superior economies of scale s Presence in large volume product segments (M&HCV, auto, railway, oil &
Slide 27: RKFL's preparedness, continued
RKFL’s preparedness Continued… ys Initiative Impact Initiated audit of its products and facilities by several Could lead to multi-year engagements OEMs and Tier 1 companies Initiative Impact Increased content per vehicle Addressing risk of cyclical upheavals in different sectors of the auto/CV indus
Slide 28: The big picture
The big picture ys Today Tomorrow Fundamentals a suitable launch pad Turnover Consume revenue headroom (from Rs 1,435 cr, FY18 80-90% growth existing unutilised capacity) by, FY22* EBITDA margin Sustained revenue growth s 19.8%, FY18 22-24%, FY22* Stronger margins and RoCE *Indicative ri Sizable cas
Slide 29: Thank you
sys Thank you ri T