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RKFORGE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.3
| Stock Code | RKFORGE | Market Cap | 9,226 Cr. | Current Price | 510 ₹ | High / Low | 863 ₹ |
| Stock P/E | 37.0 | Book Value | 169 ₹ | Dividend Yield | 0.39 % | ROCE | 6.52 % |
| ROE | 10.9 % | Face Value | 2.00 ₹ | DMA 50 | 517 ₹ | DMA 200 | 588 ₹ |
| Chg in FII Hold | -1.66 % | Chg in DII Hold | 0.53 % | PAT Qtr | 19.9 Cr. | PAT Prev Qtr | 0.37 Cr. |
| RSI | 50.5 | MACD | -2.22 | Volume | 1,03,300 | Avg Vol 1Wk | 3,94,399 |
| Low price | 473 ₹ | High price | 863 ₹ | PEG Ratio | 2.63 | Debt to equity | 0.71 |
| 52w Index | 9.44 % | Qtr Profit Var | 30.6 % | EPS | 13.4 ₹ | Industry PE | 28.0 |
📊 Core Financials
- Revenue & Profitability: Quarterly PAT at ₹19.9 Cr, a sharp recovery from ₹0.37 Cr in the previous quarter. EPS at ₹13.4 indicates moderate earnings strength.
- Margins: ROE at 10.9% and ROCE at 6.52% reflect weak efficiency compared to industry peers.
- Debt Ratios: Debt-to-equity at 0.71 is moderate, manageable but worth monitoring.
- Cash Flows: Cash flows supported by profitability recovery, though margins remain thin.
💹 Valuation Indicators
- P/E Ratio: 37.0, higher than industry average of 28.0, suggesting premium valuation.
- P/B Ratio: Current price ₹510 vs. book value ₹169 → ~3.0x, moderately expensive relative to assets.
- PEG Ratio: 2.63, indicating valuation is stretched compared to growth prospects.
- Intrinsic Value: Current valuation appears above intrinsic worth, offering limited margin of safety.
🏢 Business Model & Competitive Advantage
- Ramkrishna Forgings (RKFORGE) operates in auto components and industrial forgings, supplying to OEMs and global clients.
- Competitive advantage lies in export presence, product quality, and diversified customer base.
- Business model benefits from cyclical demand in automotive and industrial sectors, but profitability is sensitive to raw material costs.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between ₹480 – ₹500, near 52-week low and below DMA50.
- Long-Term Holding: Suitable for investors seeking cyclical growth exposure, though valuation is expensive and efficiency ratios are weak. Best to accumulate on dips.
✅ Positive
- Quarterly PAT recovery from ₹0.37 Cr to ₹19.9 Cr.
- DII holding increased (+0.53%), showing domestic institutional support.
- EPS at ₹13.4 reflects earnings stability.
⚠️ Limitation
- High P/E ratio compared to industry average.
- Weak ROE (10.9%) and ROCE (6.52%).
- Dividend yield of 0.39% is modest.
📉 Company Negative News
- FII holding decreased (-1.66%), showing reduced foreign investor confidence.
- Stock trading below DMA200 indicates weak momentum.
📈 Company Positive News
- Quarterly profit variation of 30.6% YoY highlights growth momentum.
- DII holding increased (+0.53%).
- Stock has maintained resilience above 52-week low of ₹473.
🏭 Industry
- Auto components and industrial sector trades at industry PE of 28.0, lower than RKFORGE’s 37.0, showing premium valuation.
- Sector growth supported by automotive demand recovery and industrial expansion.
🔎 Conclusion
- RKFORGE is financially stable with moderate debt and recovering profitability.
- Valuation is stretched, limiting near-term upside, while efficiency ratios remain weak.
- Best suited for cyclical investors with entry around ₹480 – ₹500 offering a reasonable margin of safety.
I can also prepare a comparative HTML snapshot of RKFORGE versus Bharat Forge to highlight valuation and profitability differences in the forging and auto component sector.