RKFORGE - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.2

📊 Long-Term Investment Analysis: Ramkrishna Forgings Ltd (RKFORGE)

Ramkrishna Forgings is a high-potential mid-cap in the auto components sector, with strong fundamentals and aggressive expansion. However, current valuation and technical weakness suggest caution for new entries.

✅ Strengths

Strong EPS Growth: EPS of ₹22.9 with 206% QoQ PAT growth.

ROE (11.6%) and ROCE (6.93%): Reasonable capital efficiency, expected to improve with scale.

PEG Ratio of 1.74: Fairly valued relative to growth.

Low Debt-to-Equity (0.70): Manageable leverage.

Diversification: Entry into rail wheels, EV components, and North American markets

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5-Year Return: Over 1,700%, indicating multibagger potential

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⚠️ Concerns

High P/E (32.7) vs Industry PE (31.2): Slightly overvalued.

Low Dividend Yield (0.33%): Not ideal for income investors.

Declining ROCE: Needs margin recovery.

Technical Weakness: RSI at 32.7, MACD negative, trading below 50 & 200 DMA.

🎯 Ideal Entry Price Zone

Based on valuation, support levels, and technical indicators

Fair Value Estimate: ₹580–₹620

Ideal Entry Zone: ₹560–₹590

Near 52-week low of ₹553 and long-term support zone

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Offers margin of safety with upside potential toward ₹940–₹1,397 by 2027

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🧭 Exit Strategy / Holding Period

If you already hold RKFORGE

📌 Holding Period

5–7 years, to benefit from EV transition, export growth, and rail diversification.

Long-term targets suggest potential price of ₹3,400–₹6,200 by 2032

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🚪 Exit Strategy

Partial Exit: If price crosses ₹940–₹1,000 without ROCE improving above 10%.

Full Exit: If PAT growth flattens for 2+ quarters or debt rises above 1.0.

Stop Loss: ₹550 (critical support zone)

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Profit Booking: 25% at ₹940, 50% at ₹1,397, remainder at ₹2,600+

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📉 Summary Table

Metric Value Verdict

P/E 32.7 Slightly Overvalued ⚠️

ROE 11.6% Moderate ✅

ROCE 6.93% Needs Improvement ⚠️

PEG Ratio 1.74 Fair ✅

Dividend Yield 0.33% Low ⚠️

Debt-to-Equity 0.70 Stable ✅

Entry Price Zone ₹560–₹590 Value Buy ✅

Exit Price Trigger ₹940+ Profit Booking Zone ✅

Would you like a comparison with peers like MM Forgings or Bharat Forge, or a breakdown of RKFORGE’s EV strategy?

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dailybulls.in

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stockpricearchive.com

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in.tradingview.com

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