Ramkrishna Forgings Ltd.

“Ramkrishna Forgings is a second-tier Indian forging company that has doubled its debt to fund a massive capacity expansion just as industry margins collapsed to 13% and ROCE fell below cost of capital at 6.8%. The stock trades at 43x tax-credit-inflated earnings with serial negative free cash flow, last-in-peer-group quality metrics, and a 35-40% probability of permanent capital impairment from its 5.2x Debt/EBITDA leverage. Even the optimistic 10-year scenario yields flat returns. There is no price at which the current risk/reward is acceptable for long-term investors.”