Ramkrishna Forgings Target Price Halved As UBS Sees Slowing CV Demand, Tariff Woes

UBS has downgraded Ramkrishna Forgings Ltd. to a ‘neutral' rating from its previous ‘buy' recommendation, while sharply cutting the 12-month target price to Rs 680 from Rs 1,500. The downgrade reflects growing concern over a combination of tariff-related headwinds, a weakening global commercial vehicle cycle, and a recent inventory write-off that could significantly affect near-term financial projections.

The global CV cycle outlook has deteriorated, particularly in the North American Class 8 truck segment, which has shown signs of weakness over the past three months, UBS said.

This, combined with tariff-induced supply chain slowdowns, is likely to weigh on Ramkrishna Forgings' revenue performance in the coming quarters. Additionally, the company's high exposure — 75% to CVs and 25% to North America — makes it especially vulnerable to these trends.

While the long-term outlook remains intact — with Indian forging companies expected to gain a greater share of the global market — UBS stresses that medium-term challenges necessitate a more cautious stance. The brokerage has therefore cut its financial year 2026 and fiscal 2027 earnings estimates for Ramkrishna Forgings by 17% and 23% respectively, citing reduced volume visibility and softer-than-expected demand.

The recent one-time inventory discrepancy of Rs 1.5 billion is also flagged as a concern. Though attributed to a lapse in internal verification processes, UBS warns that the impact on investor sentiment and valuation multiples could be significant. The brokerage also notes that the management's inability to provide timely clarity on this issue could exacerbate market apprehension.

After a sharp fall of over 40% in Ramkrishna Forgings' share price from its peak, further upside remains limited in the near term, according to UBS. With weak demand trends, limited visibility, and operational setbacks, the brokerage advocates a "wait-and-watch" approach, until a more favourable operating environment emerges.