This stock witnessed a turnaround in Q4 and seems technically sound!

Ramkrishna Forgings Limited caters to various sectors such as automotive, railways, farm equipment, bearings, oil & gas, power and construction, earthmoving & mining, both in Indian & overseas markets.   

 The company is also a critical safety item supplier for screw coupling, bolster suspension, side frame keys, and draw gear assembly for railway coaches & wagons. It is also a preferred supplier to original equipment manufacturers (OEMs) for Tata Motors, Ashok Leyland, VE Commercial and Daimler in India while for Volvo, Mack Trucks, Iveco, and Ford in the global markets.     

For quarter ended March 2021, the company reported a growth of 117.24 per cent YoY increase in consolidated sales revenue at Rs 520.43 crore. The company also witnessed a turnaround as it registered a net profit of Rs 33.88 crore as against a net loss of Rs 7.57 crore for the period ended March 31, 2020.  

The company witnessed encouraging new business wins & client engagements across several existing and new OEMs in the domestic market as well as export markets. The period saw elevated costs of key input commodities. However, price increases across the board have mitigated the impact on margin performance, during the quarter. In the domestic markets, favourable policies announced by the centre, especially the vehicle scrappage policy is expected to bring in some long-term benefits and growth opportunities for the automotive industry in India. The move is a longer-term structural positive for the auto space, particularly for the commercial vehicles (CV) industry. In the railways' sector, announcements with regards to privatisation of passenger trains & metro rail projects across the country are expected to boost demand for the domestic forging industry, going forward.   

Technically, the stock is trading near its two-and-a-half-year high and has broken out of a 14-week consolidation with the highest weekly volume. It is also trading above the 20-DMA, 50-DMA, and all the short moving averages. The 20-period weekly RSI is above the 60 zone while the MACD is about to give a buy signal. The ADX (28.07) has a very strong trend strength. The positive directional indicator, the +DMI is rising above the -DMI. The Elder impulse system has given a buy signal. Its price relative strength (RS) is as high as 90, which means that the stock price is performing better than 90 per cent of the listed stocks. In short, the stock indicates a bullish structure.