On May 8, Bharat Forge Limited shares traded 3% higher after the company reported a tad lower earnings.
Brokerage firms Kotak Institutional Equities and Nuvama anticipated limited growth for their core business. The brokerage firm showed ‘sell’ and ‘reduced’ ratings, respectively, keeping the price targets unchanged.
At 9:20 am, the stock traded at Rs 780 on the BSE, up 2.6% from its earlier close, while India’s benchmark Sensex stepped 0.54% to 61,385 points.
The quarter’s Net profit declined 7% YoY to Rs 244.50 crore from Rs 262 crore in the last year. Revenue soared 19% to Rs 1,997.30 crore.
Bharat Forge logged a standalone EBITDA of Rs 490 crore, with forex losses at 9% below Kotak’s estimates amid EBITDA losses at overseas subsidiaries.
After suffering in forex loss of Rs 34.70 crore, the standalone EBITDA was a tad lower than Kotak’s estimates by 3%. This was sorely due to less expected revenue, although offset by better gross margins.
The company expects its EU and US forging business to turn profitable in Q1 and Q2 of FY24, respectively. This will be considered by maximum utilisation levels and price adjustments for addressing inflationary pressures.
The Bharat Forge is positive about FY24 based on several factors. Firstly, they expect an increase in the defence segment amid new orders in exports worth Rs 2,000 crore, comprising an order for 307 ATAGs for which RFQs will be floated soon. Bharat Forge expects to ramp up to $100 million in FY24, with strong margins and profits.
Secondly, there is strong scope in the aerospace segment, expecting a growth rate of 30% to 40% even in FY24, after doubling in FY23. The near-term goal is to reach Rs 500 to Rs 600 crore in revenue, up from the present Rs 170 crore.