Epic Research

Ramkrishna Forgings (Buy)

CMP: ₹659.50

TP: ₹875

Ramkrishna Forgings (RMKF) is engaged in the manufacturing of forgings. The company is operating in forgings, and tours & travels segments. The company supplies its products to various sectors, such as domestic and overseas markets. It also operates as a critical safety item supplier for screw coupling, bolster suspension, side frame keys and draw gear assembly for railway coaches and wagon. The company offers its products under product categories, such as rolled products, forged products and machined products. Its forgings are used in various industries and sectors, which include automotive, earth moving and mining, farm equipment, general engineering, railways, steel plants and oil exploration.

RMKF is a lucrative stock at current levels. We understand that company has posted revival on all the parameters. It had done capex for which there was some negative and flat quarters earlier and with its new press line we believe company can gain significant market share from its domestic customers. There is revival in the US and North American Commercial Vehicle Market and Management has positive guidance for it. Company has also now access to European Markets post a deal with a local OEM. There is significant reduction in debt to equity in the last two years. We value stock at 18x of FY-20e EPS with a target of ₹875.

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