Ramkrishna Forgings Ltd., a leading player in the forging industry, delivered a robust financial performance in the second quarter of FY25, as it reported a consolidated net profit of ₹190 crore, marking an impressive 131% year-on-year (YoY) increase. This surge in profitability, up from ₹82.2 crore in Q2 FY24, was significantly fueled by a one-time gain of ₹95 crore from the sale of a subsidiary to Yatra Online.

Revenue Growth Driven by Strong Demand

Revenue from operations saw a 17.2% YoY growth, climbing to ₹1,054 crore in Q2 FY25 compared to ₹899 crore in the same quarter of the previous fiscal year. This growth reflects steady demand across Ramkrishna Forgings' key business segments, which have been vital in maintaining the company’s momentum despite challenging market conditions.

The company’s operational performance remained solid, with EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) rising 16.2% YoY to ₹233 crore, compared to ₹200 crore in Q2 FY24. However, EBITDA margins remained relatively stable at 22.1%, down slightly from 22.3% a year ago. This marginal dip in margins suggests that while demand remained steady, certain operational costs may have exerted pressure on profitability.

One-Time Gain Bolsters Profit Surge

The notable profit increase can largely be attributed to the sale of a subsidiary, which generated a one-time gain of ₹95 crore. This strategic move not only boosted Ramkrishna Forgings' bottom line but also demonstrated the company's ability to unlock value from its investments and subsidiaries. This financial maneuver significantly contributed to the YoY growth in net profit, reflecting the company’s sharp focus on capital efficiency.

Interim Dividend Declaration

In light of the strong financial performance, Ramkrishna Forgings' board declared an interim dividend of ₹1 per share, which signals the company’s confidence in its earnings outlook. The record date for the dividend has been set for 2 November 2024, with payments expected within 30 days. This dividend announcement is likely to attract positive attention from investors, as it highlights the company’s solid cash flows and profitability.

Stock Performance Amid Results Announcement

Despite the positive earnings report, shares of Ramkrishna Forgings Ltd. were trading at ₹935.45 as of 2:53 PM, reflecting a 0.88% decrease on the day. This decline may be linked to broader market trends rather than the company’s performance, as profit-taking by investors post-results could also be a contributing factor.

Outlook and Strategic Focus

Ramkrishna Forgings continues to focus on strengthening its market presence in the forging industry while driving growth through strategic initiatives like asset sales and expanding its key business segments. With a strong financial base and consistent operational performance, the company is poised to capitalize on upcoming opportunities in the industry.

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Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.In summary, Ramkrishna Forgings Ltd.'s Q2 FY25 results highlight strong financial growth driven by strategic initiatives like the sale of its subsidiary and sustained demand across its operational segments. With a solid balance sheet and consistent earnings performance, the company is well-positioned to deliver continued value to shareholders.