Bharat Forge: Export gears performance - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


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

Bharat Forge: Export gears performance

Oct 21, 2002

Bharat Forge's (BFRG) reported a sharp rise in both turnover and profits for the second quarter ended September 2002. The company's export thrust has yielded rich dividend if the first half numbers are anything to go by.

(Rs m)2QFY022QFY03Change1HFY021HFY03Change
Net sales 982 1,451 47.7% 1,983 2,757 39.0%
Other Income 20 2 - 42 3 -
Expenditure 742 983 32.6% 1,498 1,897 26.6%
Operating Profit (EBDIT) 241 468 94.4% 485 860 77.3%
Operating Profit Margin (%)24.5%32.3% 24.5%31.2% 
Interest 111 110 -0.5% 236 219 -7.2%
Depreciation 90 103 13.7% 191 205 7.1%
Profit before Tax 59 257 334.0% 99 440 342.0%
Tax 34 83 147.5% 34 143 323.1%
Profit after Tax/(Loss) 25 174 580.4% 66 297 351.7%
Net profit margin (%)2.6%12.0% 3.3%10.8% 
No. of Shares (m) 37.7 37.7   37.7 37.7  
Diluted Earnings per share* 2.7 18.4   3.5 15.8  
P/E Ratio (x)     11.0  
(* annualised)      

Turnover in 2QFY03 and 1HFY03 has increased by 48% and 39% respectively. One of the key growth drivers for the company is exports, which is apparent from the table below. Exports as a percentage of turnover has almost doubled in 1HFY03. In FY02, BFRG signed an agreement with Dana Corp. of US for supply of forgings. As per this agreement, the company has taken over order book position of Danas SpicerEurope Ltds operation in Kirkstall, UK for Rs 210 m. The orders are worth 40 million pounds that would be completed over six years (starting FY03). BFRG also won a five year contract for supply of forgings for a Chinese manufacturer in 1QFY03.

The export thrust...
(Rs m)2QFY022QFY03Change1HFY021HFY03Change
Domestic 712 735 3.3% 1,510 1,596 5.7%
Exports 271 716 164.7% 473 1,160 145.6%
Exports % of sales27.5%49.3% 23.8%42.1% 

But at the same time, despite the rise in commercial vehicle sales in the domestic market (the key consumer segment), BFRG has posted a slower growth in domestic turnover in 2QFY03. This we believe is primarily on account of downward pressure on prices as OEMs generally tend to squeeze supplier in times of difficult market conditions. However, operating margins have showed a sharp rise on the back of benefits from increased capacity utilisation and lower employee related expenditure. BFRG trimmed its workforce by more than 1,300 employees in the last two years. Despite lower other income and higher tax provisioning, net margins have also increased significantly, which is a commendable performance. Historically, net profit margins have ranged between 5%-9%.

The stock currently trades at Rs 174 implying a P/E multiple of 11x annualised 1HFY03 earnings. The first half performance of the company is above our expectations. But since there is not much positive growth driver in the domestic market, domestic sales will remain subdued for the remaining quarters. The fortunes of the auto ancillary sector are closely linked to those of the auto sector, which limits the company's growth prospects. However, BFRG has been focusing on boosting exports to reduce cyclicality in business. This initiative bodes well in the long-run.

Equitymaster requests your view! Post a comment on "Bharat Forge: Export gears performance". Click here!


More Views on News

BHARAT FORGE Announces Quarterly Results (1QFY22); Net Profit Up 229.0% (Quarterly Result Update)

Aug 16, 2021 | Updated on Aug 16, 2021

For the quarter ended June 2021, BHARAT FORGE has posted a net profit of Rs 2 bn (up 229.0% YoY). Sales on the other hand came in at Rs 21 bn (up 82.6% YoY). Read on for a complete analysis of BHARAT FORGE's quarterly results.

BHARAT FORGE 2020-21 Annual Report Analysis (Annual Result Update)

Aug 10, 2021 | Updated on Aug 10, 2021

Here's an analysis of the annual report of BHARAT FORGE for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of BHARAT FORGE. Also includes updates on the valuation of BHARAT FORGE.

India's Best Drone Stocks podcast (Views On News)

Jul 30, 2021

Impact of Drone Policy on the megatrend in India's Drone ecosystem.

Massive Surge in the Shares of Tata Motors Today. Key Factors Favouring the Rally (Views On News)

Oct 13, 2021

Tata Motors zooms 23% after report of TPG investing Rs 75 bn in EV arm.

India's Edge in Electric Vehicle Stocks podcast (Views On News)

Sep 9, 2021

India has a huge advantage in using climate friendly EV batteries.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 6, 2021 02:49 PM


  • 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