Ramkrishna Forgings Ltd.'s Rs 1,000 crore qualified institutional placement will help the company pare debt and improve its bottom line, according to the company's chief financial officer.
The QIP, which garnered interest from marquee investors such as Nomura, Ant Capital and BNP Paribas, was subscribed to three times, Lalit Khetan told BQ Prime in an interview.
A significant portion of the capital raised through the QIP is designated for debt repayment, according to him. The company aims to reduce its existing debt from Rs 1,500 crore to a streamlined Rs 500 crore by the end of fiscal 2024, he said.
The fundraise is expected to contribute an estimated Rs 80 crore to the profit before tax through reduced funding costs, he said.
Ramkrishna Forgings has returned 20-fold gains since Covid-19 lows in July 2020, with its market capitalisation now at over Rs 11,000 crore.
The company expects a steady top-line trajectory, guiding for 20% compounded annual growth in volume and revenue in the next three years.
It is also looking to diversify into the non-auto segment, Khetan said. The current revenue mix is around 80:20 in favour of the auto segment, which will move to a more balanced 70:30 ratio in the coming period, he said.
The company's margin has risen to above 20% over the last couple of years, and the management is confident that it will rise by a further 200 basis points to the 23-24% range. Recent acquisitions, Khetan said, are set to aid both the top line and margin.
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