Ramkrishna Forgings plunges 12%, at 52-wk low on heavy volumes; here's why

Business Standard

28-04-2025

Ramkrishna Forgings share price today: Shares of Ramkrishna Forgings (RK Forgings) plunged 12 per cent to hit a 52-week low of ₹579 on the BSE in Monday's intra-day trade after the company identified discrepancies in certain inventory cases, during the ongoing physical verification of inventory for the financial year ended March 31, 2025. This is the first ever incident of its kind in the history of the company.
The stock price of the auto components & equipment company has fallen below its previous low of ₹ 604.50 touched on March 3, 2025. In the past two days, the stock has slipped 16 per cent, while it has plunged 33 per cent from its previous month high of ₹862.05 touched on March 24, 2025. The stock had hit a 52-week high of ₹1,064 on October 15, 2024.
At 11:19 AM, RK Forgings was quoting 6 per cent lower at ₹614.10, as compared to the 0.88 per cent rise in the BSE Sensex. The average trading volumes on the counter rose nearly four-fold today. A combined 4.5 million equity shares have changed hands on the NSE and BSE.
During the course of Annual Physical Verification of Inventory undertaken by the Company for the financial year ended 31 March, 2025, which commenced from 6 April, 2025, it was observed that there have been discrepancies in certain cases of inventory; RK Forgings said in an exchange filing.
While the Physical Verification process is continuing, as per the internal estimates of the company, a likely adverse impact of the order of 4 per cent to 5 per cent of the net worth of the company is indicated.
On the basis of the final joint report by the Independent External Agencies, the Company will appropriately account the impact in its Financial Statements on a one-time basis.
The Promoters of RK Forgings, understanding the potential adverse impact that may arise pursuant to the fact-finding study, on the net worth of the company, stand firmly committed to protect and preserve the stakeholders' interest to uphold the highest standards of Corporate Governance, it stated in the exchange filing. It was further noted that this is the first ever incident of its kind in the history of the Company, RK Forgings said in a statement.
Further, in order to mitigate the potential adverse impact assessed upon conclusion of the fact-finding study, the Promoters are giving an assurance to the investors that they intend to fund the same through permissible instruments as permitted under applicable laws, the company said.
Appointment of independent external agencies for a joint fact-finding study
The Audit Committee Meeting of RK Forgings at its meeting held on Saturday, April 26, 2025, has approved the appointment of reputed Independent External Agencies to conduct a joint fact-finding study for the discrepancy in inventory and reasons thereof.
The decision to make the aforesaid appointment has been taken by the Audit Committee in the interest of ensuring transparency, accountability and adherence to the highest standards of Corporate Governance and to mitigate future recurrence of such nature, RK Forgings said.
Brokerage view – ICICI Securities
RK Forgings anticipates a likely adverse impact of 4 per cent to 5 per cent of its net worth amounting to ~₹150 crore, due to these discrepancies, and the final impact will be accounted for in the financial statements on a one-time basis after the external agencies' report is received. In order to mitigate the adverse impact, the promoters are giving an assurance that they intend to fund the same through permissible instruments. This is sentimentally negative for the company.
9MFY25 financial performance
RK Forgings' growth momentum continued in the first nine months (April to December 2025) of the financial year 2024-25 (9MFY25) with the consolidated revenue increasing to ₹3,086.9 crore from ₹2,932 crore in 9MFY24. The growth was mainly driven by a strong order book for both domestic as well as export orders, and a strong performance despite an industry-wide slowdown in the domestic medium and heavy commercial vehicle (MHCV) market and muted exports. Revenue and volumetric growth were supported by new product launches, and the increasing content per vehicle as well as wallet share with new and existing customers.
India Ratings and Research (Ind-Ra) expects the consolidated revenue to have grown further to ₹4,100 crore-4,200 crore in FY25 and to increase to ₹4,500-4,600 crore in FY26, driven by a modest recovery likely in the domestic commercial vehicles (CVs) industry, incremental revenue from the acquired entities and the ramping up of increased capacities.
The agency expects the credit metrics to improve in FY26, mainly due to a moderate capex plan, improving profitability and ramping up of operations in new businesses/ capacities leasing. The maintenance of the credit metrics in FY26 will remain a key monitorable due to the capital-intensive nature of the business and ongoing acquisitions.
Ind-Ra believes the company's business profile will improve over the next two-to-three years due to a further diversification in the revenue base, synergies from the manufacturing capacities and cross-selling opportunities to marquee clientele. The agency will monitor the company's ability to scale up these businesses. The turnaround of these businesses remains a key rating monitorable, the rating agency said in its rationale dated April 15, 2025.
About Ramkrishna Forgings
RK Forgings manufactures forged and computer numerical control machined components for the automobile, railways, defence and mining sectors. It manufactures components for transmission and axles including shafts, gear box, crown wheel, pinion, spindles and bearing rings for the auto sector. RK Forgings has eighteen manufacturing facilities in India and has a total standalone installed capacity of 268,400 metric tonnes, and a consolidated installed capacity of 306,000 metric tonnes.