Ramkrishna Forgings up 3%; hits life high as UBS initiates with 'Buy' call

UBS reckons that the consensus has not fully factored in growth drivers such as higher penetration in EV and aluminium forging, rising contributions from acquisitions and new business in earth moving

Ramkrishna Forgings shares climbed as much as 3 per cent in Tuesday's trade on BSE and scaled a life high at Rs 1,064 per share. The buying interest in the stock came after global brokerage firm UBS initiated a 'Buy' call on the stock with a 12 month target price of Rs 1,500 per share. 

At around 10:17 AM, Ramkrishna Forgings' share price was up 1.75 per cent at Rs 1047.8 per share. In comparison, the BSE Sensex was down 0.25 per cent at 81,766.99 at around the same time.

The market capitalisation of the company stood at Rs 18,941.73 crore at around the same time.

UBS is bullish on Ramkrishna Forgings as it expects the company to outperform its peers as it transitions from a forged product manufacturer to a complete assembly provider offering one-stop solutions for clients.

"We flag significant opportunities in aluminium forging and entry into the electric vehicle (EV) vertical, and fabrication and assembly work for the earth moving and agricultural segments, Vande Bharat Express train orders and entry to the two-wheeler segment," UBS stated in a research note.

"Ramkrishna Forgings' outperformance of peers indicates a strong execution track record," it added. 

Further, the brokerage firm believes a higher penetration in EV and aluminium forging, rising contributions from the Automotive Components India Limited, Multitech Auto, and JMT Auto acquisitions, new clients in the earth moving, farm equipment, and oil and gas segments, along with rail segment opportunities from Vande Bharat Express and Metro trains will drive growth for the company going forward. 

UBS reckons that the consensus has not fully factored in these growth drivers and expects Ramkrishna Forgings' revenue compound annual growth rate (CAGR) at 22 per cent against a consensus of 17 per cent during FY25-27E.  

That apart, analysts at UBS also expect the company's market share to grow in contrast with global and Chinese competitors based on Ramkrishna's diversification into new products, increasing capacity, along with its efforts to move up the value chain by increasing machined products, coupled the its efficient production processes.

In the past one year, Ramkrishna Forgings share price has gained 53 per cent, compared to the BSE Sensex's rise of 23 per cent during the same period. 

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