X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Bharat Forge: Banking on a good start - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Bharat Forge: Banking on a good start
Aug 17, 2015

Bharat Forge has announced its June 2015 quarter results. The company has reported a 14.2% YoY and 35% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Standalone topline for the quarter grows 14.2% YoY, exports grow by a strong 21% YoY
  • Operating margins see an improvement, leading to a 22% YoY growth in operating profits
  • Bottomline grows by a robust 35% YoY on the back of strong operating performance and lower interest costs

Standalone performance snapshot
(Rs m)  1QFY15   1QFY16  Change
Sales 9,881 11,285 14.2%
Expenditure 7,048 7,824 11.0%
Operating profit (EBDITA) 2,833 3,461 22.2%
Operating profit margin (%) 28.7% 30.7%  
Other income 242 288 19.2%
Interest 316 213 -32.7%
Depreciation 658 643 -2.2%
Profit before tax 2,101 2,894 37.7%
Tax 651 940 44.4%
Profit after tax/(loss) 1,450 1,953 34.7%
Net profit margin (%) 14.7% 17.3%  
No. of shares (m) 232.9 232.9  
Diluted earnings per share (Rs)*   33.5  
P/E ratio (x)*   36.4  
*On a trailing 12-month basis and excluding extraordinary items

What has driven performance in 1QFY16?
  • The company's sales were up 14% YoY during the quarter. This was largely due to the 21% YoY growth in export revenues as domestic revenues were up by 6% YoY. Exports did strongly largely led by the North American market. The CV market in this region continued to be robust on the back of higher demand for long haulage trucks and improving economic scenario. Thus, the US grew 33% YoY during the quarter. Revenues from Europe, however, declined by 5% YoY on account of stagnation in growth in the Eurozone economy.

  • Coming back to India, the performance of the auto industry was a mixed bag. MHCVs and passenger cars witnessed growth, while LCVs showed a marginal decline. The growth in M&HCV was mainly driven by pent up replacement demand and was supported by the increased profitability of fleet operators due to the fall in crude prices. Demand for passenger vehicles was higher in the urban markets than rural led by higher disposable incomes. Thus, overall, revenues from the domestic market for Bharat Forge grew by a modest 6% YoY.

  • Operating profits grew by 22% YoY during the quarter led by the fall in raw material costs and manufacturing expenses (as percentage of sales). Margins also improved by 2% to 30.7% during the quarter on the back of good topline growth, operational efficiency and better costs control.

  • PBT of the company came in higher by 38% YoY as besides higher operating profits, lower depreciation charges and substantial reduction in interest costs helped matters.

  • At the bottomline level, profits grew by 35% YoY slightly lower than the growth in PBT on account of higher tax expenses.
What to expect?

At the current price of Rs 1,219, the stock trades at 37.4 times our estimated FY17 earnings per share on a standalone basis. Going forward, Bharat Forge is seeing growth in both the commercial and passenger vehicles segment across its key markets. The company is gearing itself to capitalise on the opportunities presented by the Modi government's 'Make in India' programme particularly in the rail, power, defense and aerospace sector. In the medium term, the company expects the challenging demand environment in the industrial sector to continue as the global economies adjust to lower commodity prices. Overall, despite good growth prospects, given that the stock of Bharat Forge is fairly valued at the current price, our view is that investors not buy it at current levels.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

BHARAT FORGE SHARE PRICE


Dec 15, 2017 (Close)

TRACK BHARAT FORGE

  • Track your investment in BHARAT FORGE with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

BHARAT FORGE 5-YR ANALYSIS

COMPARE BHARAT FORGE WITH

MARKET STATS