Ramkrishna Forgings jumped 4.57% to Rs 725.25, extending gains for the fourth day.
The stock has added 12.48% in four sessions, from its recent closing low of Rs 644.80 recorded on 29 June 2021.
The scrip surged 5.13% to hit the day's high at 729.15, which is a 52-week high for the counter.
The scrip as zoomed 415.64% from its 52-week low of Rs 140.65 hit on 28 July 2020.
In an exchange filing made during market hours today, Ramkrishna Forgings (RKFL) said that ICRA Ratings had reaffirmed the company's long-term rating and short-term rating at '[ICRA] A' and '[ICRA] A2+', respectively. The ratings agency has revised its outlook on the same to 'positive' from 'stable'.
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ICRA Ratings said that the in the long-term rating outlook factors in the steady improvement in medium & heavy commercial vehicle (M&HCV) demand in both the domestic as well as the export markets and RKFL's adequate capacity and product reach to cater to this rising demand.
ICRA expects RKFL to register a healthy improvement in sales and operating profits in FY2022 and beyond, which would augment its operating cash flows. As the company is at the end of its capex cycle, it would be able to sweat its additional capacity at a time of market expansion and deleverage its balance sheet going forward.
ICRA notes a sharp improvement in RKFL's financial performance in Q4 FY2021 with a 133% YoY growth and a 30% sequential growth in revenues. The operating margins also improved in Q4 FY2021 and stood at 20.8% compared to 16.5% in Q4 FY2021 and 19.4% in the last quarter.
Given a favourable demand outlook for the M&HCV industry in FY2022, the positive momentum is expected to continue.
ICRA also takes cognisance of RKFL's proposed acquisition of ACIL Limited. While the acquisition is likely to provide the company with an opportunity to further diversify its sectoral and customer base going forward, debt for the acquisition would impact the capital structure of the consolidated entity over the short to medium term.
Moreover, the quality of the assets being taken over, time required to turn around the performance of the company, along with any additional investments required would be the key factors in determining the returns from the acquisition.
Ramkrishna Forgings is a manufacturer of supplier of open and closed die forgings of carbon and alloy steel, micro alloy steel and stainless steel forgings.
The company reported a consolidated net profit of Rs 33.89 crore in Q4 FY21 as against a net loss of Rs 7.57 crore in Q4 FY20. Net sales during the quarter increased by 117.25% YoY to Rs 520.44 crore.
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