Balu Forge Shares Rise 11%, Hit 52-Week High on Supply Orders from Middle East

Balu Forge is setting up a manufacturing plant in the town of Belagavi in ​​Karnataka state to boost production.

Shares of Balu Forge rose 11% and hit a 52-week high of Rs 99.85 on Wednesday after the company secured a trial order from a Middle Eastern tractor maker.

The trial order initially includes the supply of 10,000 subassemblies and is expected to increase to more than 50,000 annually. The precision engineering company has started supplying under the contract and expects to generate additional revenue in the coming quarters.

Management said the supply order aligns with the company’s goal of expanding its presence in international markets and marks its entry into the production and supply of powertrain subcomponents.

Balu Forge chairman and general manager Jaspal Singh Chandock said the order would strengthen its position in the agricultural sector. “Financially, the order is expected to support our long-term growth plans and generate healthy EBITDA margins,” he said.

In Q3FY23, it derived 57% of its revenue from the agricultural segment.

The company has a monthly production capacity of 5,000 tons of forged parts and an annual output of 3.6 lakh crankshafts. The company has a global distribution network of over 80 and operates through domestic and export divisions.

Last month, the company announced it would set up a 52,000-square-meter manufacturing facility in Karnataka, with major production units including precision machining and forging, defence, railway axles and axles, and new energy and mobility.

In Q3, Balu Forge’s operating income rose 11% year-on-year to Rs 89.4 crore. EBITDA for the quarter rose 56% year-on-year to Rs 20.1 crore, while the margin expanded 603 basis points to 21.88%. It is at 15.28% for the September 2022 quarter. Net profit for the quarter rose 38% year-on-year to Rs 11.5 crore, while the net margin also expanded by 226 basis points.

Shares of Balu Forge have risen 24% in the past six months and 10% in the last month.

The stock was trading 4.47% higher at Rs 93.69 on the BSE at 12:10 pm, while the benchmark BSE Sensex was up 0.35% at 58,104.40.

Get Daily Prediction & Stocks Tips On Your Mobile