Ramkrishna Forgings Limited's (NSE:RKFORGE) CEO Looks Like They Deserve Their Pay Packet

Key Insights

• Ramkrishna Forgings to hold its Annual General Meeting on 16th of September
• Salary of ₹20.4m is part of CEO Naresh Jalan's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Ramkrishna Forgings' EPS grew by 82% and over the past three years, the total shareholder return was 1,501%

The performance at Ramkrishna Forgings Limited (NSE:RKFORGE) has been quite strong recently and CEO Naresh Jalan has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 16th of September. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

View our latest analysis for Ramkrishna Forgings

How Does Total Compensation For Naresh Jalan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ramkrishna Forgings Limited has a market capitalization of ₹115b, and reported total annual CEO compensation of ₹43m for the year to March 2023. We note that's a small decrease of 4.4% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹20m.

On examining similar-sized companies in the Indian Metals and Mining industry with market capitalizations between ₹83b and ₹265b, we discovered that the median CEO total compensation of that group was ₹39m. This suggests that Ramkrishna Forgings remunerates its CEO largely in line with the industry average. What's more, Naresh Jalan holds ₹2.1b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₹20m	₹16m	48%
Other	₹22m	₹29m	52%
Total Compensation	₹43m	₹45m	100%

Talking in terms of the industry, salary represented approximately 100% of total compensation out of all the companies we analyzed, while other remuneration made up 0.2014% of the pie. It's interesting to note that Ramkrishna Forgings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Ramkrishna Forgings Limited's Growth Numbers

Ramkrishna Forgings Limited has seen its earnings per share (EPS) increase by 82% a year over the past three years. Its revenue is up 30% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Ramkrishna Forgings Limited Been A Good Investment?

Boasting a total shareholder return of 1,501% over three years, Ramkrishna Forgings Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Ramkrishna Forgings that investors should think about before committing capital to this stock.

Important note: Ramkrishna Forgings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.