RKFORGE Q2 FY27 Earnings Call: Rs. 673 Cr Order Wins, Capex Raised to Rs. 550 Cr

RKFORGE held its Q2 FY27 earnings call on October 30, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Quarter: Operating Leverage Drives Margin Expansion

• Revenue of Rs.1,405 crore — up 54.9% YoY (vs Rs.908 crore in Q2 FY26) and 15.5% QoQ (vs Rs.1,217 crore in Q1 FY27).
• EBITDA (ex-other income) of Rs.256 crore — margin expanded to 18.23% from 13.5% in Q2 FY26 and 17.96% in Q1 FY27, attributed to operating leverage from improved capacity utilization, better product mix and operating efficiencies.
• PBT of Rs.95 crore — vs a loss of Rs.10 crore in Q2 FY26 and profit of Rs.65 crore in Q1 FY27; PAT of Rs.71 crore, up 47% QoQ.
• Debt reduced by Rs.126 crore in H1 FY27 — management maintains its guidance of Rs.500 crore total debt reduction for FY 2026-2027.
• Net working capital rose ~Rs.140 crore — CFO Lalit Ketan attributed this to volume growth in value terms; working capital days remain broadly at March 2026 (FY 2025-2026 year-end) levels, but the inventory build reflects shipping delays.
• Macro tailwinds cited by management — GST collections of ~Rs.6.15 lakh crore in Q2 FY27; IIP growth of 7.4% in July and 8% in August; domestic CV and PV sales grew 28.7% and 30.7% respectively during Q2 FY27.

Rs.673 Cr Order Wins; North America Casting Breakthrough

• Rs.673 crore of new order wins in Q2 FY27 — across CV, EV, LV and farm equipment segments with ~4-year program life; mix ~48% domestic / 52% export; Rs.304 crore CV, Rs.272 crore light vehicles, Rs.7 crore EV.
• Casting business won Rs.447 crore — of which Rs.272 crore is for the North American export market for light vehicle applications; Whole-Time Director Nilesh Gandhi said this "opens our door for export market." The NA order requires 6-9 months of validation before regular supplies; the domestic balance moves to bulk supplies within a 12-14 week development cycle after sample approval.
• Farm equipment orders of Rs.90 crore — reflect growing presence in off-highway applications.
• Exports rose to Rs.424 crore — from Rs.277 crore in Q2 FY26, with both Europe and the US higher; the North American market had been lull in the prior year due to tariff issues. Europe's share of the geographic mix has risen to 41% from ~28% two years ago (FY 2024-2025), while North America stands at ~58%.
• Export growth is new-product-driven, not share shift — MD Naresh Jalan clarified new business comes from new product launches where RKFORGE is part of the client's launch; 8-9 months of development and testing before these orders convert to revenue (timeline relative to order win).
• Aluminum forgings and cold forgings utilization above 50% — as of Q2 FY 2026-2027; aluminum forging capacity confirmed at 6,000 tons; management is working to add more customers.
• FTA traction limited so far — MD Naresh Jalan stated the company is not seeing major customer inquiries under the current UK FTA; the Europe FTA is still pending approval by the European Union, with traction expected only after EU approval.

First Wheels Offered for Inspection; Ramp Through Q4 FY27

• First batch of 300 wheels offered to Railways for inspection in November 2026 — inspection expected to complete within a couple of weeks; management clarified no RDSO approval is required for wheels.
• Ramp guidance — first-phase production of 2,000-3,000 wheels/month targeted from December 2026 (Q3 FY 2026-2027), scaling to 80% of capacity with 4,000-5,000 wheels/month in Q4 FY 2026-2027; ~25,000 wheels guided for full FY 2026-2027, below the analyst's ~30,000 estimate.
• JV funding on track — no additional equity infusion; the committed Rs.20 crore equity contribution remains on track; the newly approved Rs.56 crore is for Phase 2 (machining capability for another 114,000 wheels), with Phase 1 (114,000 wheels) completed; the entire project cost (referenced at Rs.2,180 crore in Q&A) remains intact.
• JV margin potential — MD Naresh Jalan said the JV can achieve around 18-20% EBITDA margin at optimum capacity (period unspecified), better than the casting business profile; management did not quantify the expected first-year JV loss from depreciation and interest, or RKFL's 51% share of it.
• Railway segment revenue ~Rs.64-65 crore per quarter — roughly flat QoQ in Q1 and Q2 FY27 per analyst Vinit Shah; CFO Lalit Ketan said the segment only appears flat on a percentage basis as total revenue rises, and railway demand is high with continuous growth from the company's side.

Margin Cadence Intact, But Shipping and Steel Bite

• 30-40 bps QoQ margin improvement guidance reiterated — CFO Lalit Ketan restated the earlier guidance for FY 2026-2027, stating the endeavor is to keep achieving it; margins have expanded 30-50 bps per quarter over the past couple of quarters (continuation period unspecified).
• Rs.8-9 crore net shipping cost hit in Q2 FY27 — after partial/substantial pass-through; management said it will continue to bear and share part of the cost if freight stays at current levels, as customers are not prepared to bear the entire increase; management (citing Freightos) sees no incremental increase currently, with rates largely settled at the peak.
• Rs.6-7 crore negative carry from raw material prices — MD Naresh Jalan confirmed no inventory gains in Q2 FY27; steel prices rose far more than export price increases obtained ("domestic steel prices are right now crazy"), with inventory losses confined to exports. Management expects another steel price hike in India, possibly in January 2027 (Q4 FY 2026-2027), and is prepared to pass it on domestically.
• Peak-margin aspiration, no timeline — management aspires to cross the previous peak EBITDA margin (cited as 20-21% in Q&A analyst cited 22% achieved in FY 2021-2022) but does not expect this in Q3 or Q4 FY 2026-2027; MD Naresh Jalan refused to commit to a timeline, saying it "can happen much before."
• Subsidiary margins corrected to 16-17% — CFO Lalit Ketan corrected the analyst's computed 27% (vs standalone 17-18%), noting the apparent gap is an artifact of inter-company sales elimination; consolidated improvement is driven by the casting and oil & gas businesses.
• Gross margin sustainability — responding to Electrum PMS's flag that gross margin ran materially above the earlier general rate, CFO Lalit Ketan attributed the level to strong market traction and diligent product selection, and expects to sustain and grow gross margins as utilization improves (no explicit timeframe or numeric guidance).

Capex Raised to ~Rs.550 Cr; Debt Path to Rs.1,500 Cr Net

• FY 2026-2027 capex raised to ~Rs.550 crore — up from Rs.350 crore guided in Q1 FY 2026-2027, largely machining/value-add capability addition; H1 FY27 capex totaled ~Rs.390 crore plus Rs.40 crore of JV investment (analyst-cited), with ~Rs.160 crore of further capex in H2 FY27, all on the machining side.
• Debt guidance maintained — FY 2025-2026 closed with gross debt of Rs.2,173 crore (~Rs.2,000 crore net of bill discounting) at March 2026; management maintained guidance of a Rs.500 crore net debt reduction to Rs.1,500 crore by end of FY 2026-2027, with gross debt expected at Rs.1,670-1,700 crore (current gross debt Rs.2,200 crore, analyst-cited). Repaying the full Rs.500 crore would lower finance cost by almost Rs.40 crore per annum at ~8% current interest cost.
• Rs.300-400 crore debt reduction aimed for FY 2027-2028 — the CFO did not endorse the analyst's suggestion of another Rs.500 crore repayment in FY 2027-2028; bill discounting is non-recourse on Tata Motors' and other customers' lines and treated as receivables knocked off from net debt.
• ROC guidance reaffirmed — CFO Lalit Ketan confirmed RKFORGE will be in the range of 12-15% ROC by the end of FY 2026-2027, unchanged from Q1 FY27 guidance; the 20% ROC target for FY 2027-2028 is maintained but explicitly characterized as "an aspiration" rather than a firm commitment.
• Capacity adequacy — MD Naresh Jalan said existing capacity (utilization at 88%, analyst-cited, Q2 FY27) is sufficient to serve the new casting order; any fresh capacity capex is planned for FY 2027-2028.

FY27 Guidance Reiterated; Multi-Year Commentary Deferred

• 20-25% growth guidance for FY27 reiterated — CFO Lalit Ketan said confidence rests on the RFQ pipeline, orders secured over the last few quarters, customer inquiries, and guidance from customers; H2 FY 2026-2027 is expected to be even better than H1, with strong visibility and a "very strong market."
• Rs.8,000 crore revenue target for FY29 on track — per CFO Lalit Ketan, with updates to follow over time; MD Naresh Jalan clarified the wheel project alone cannot generate Rs.8,000 crore of revenue.
• Passenger vehicles identified as the next growth lever — MD Naresh Jalan is looking at almost 10%+ growth to come from passenger vehicles over the next 2 years, by CY 28 or FY 29; management is "extremely confident" in the PV side citing the current order book, new wins and a strong pipeline.
• Multi-year guidance deferred — management declined to quantify FY28 growth and will guide for FY 2027-2028 onward only after the FY 2026-2027 full-year earnings call; on the 20-24% CAGR ambition (period unspecified), FY 2026-2027 looks "extremely strong" and may surpass previous peaks in YoY growth.
• Aerospace in direct OEM discussions — CFO Lalit Ketan said the company is targeting engine-side precision forging components (frame components also being explored), not via tier-1/tier-2 suppliers; responding to an analyst-cited industry-wide 4-5 year approval cycle, Ketan said the timeline can be much faster because forgings are machined in-house, speeding metallurgical validation. No committed timeline; no specific defense update currently.
• Risks flagged by management — geopolitical tensions in the Middle East, threats of new tariffs, supply chain dynamics, currency movements, rising input costs and a sharp rise in shipping costs.