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

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

  • MyStocks

MEMBER'S LOGINX

     
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) 2QFY02 2QFY03 Change 1HFY02 1HFY03 Change
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 Ltd’s 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) 2QFY02 2QFY03 Change 1HFY02 1HFY03 Change
Domestic 712 735 3.3% 1,510 1,596 5.7%
Exports 271 716 164.7% 473 1,160 145.6%
Exports % of sales 27.5% 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 (3QFY20); Net Profit Down 58.7% (Quarterly Result Update)

Feb 17, 2020 | Updated on Feb 17, 2020

For the quarter ended December 2019, BHARAT FORGE has posted a net profit of Rs 1 bn (down 58.7% YoY). Sales on the other hand came in at Rs 11 bn (down 36.4% YoY). Read on for a complete analysis of BHARAT FORGE's quarterly results.

BHARAT FORGE 2018-19 Annual Report Analysis (Annual Result Update)

Sep 16, 2019 | Updated on Sep 16, 2019

Here's an analysis of the annual report of BHARAT FORGE for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of BHARAT FORGE. Also includes updates on the valuation of BHARAT FORGE.

BHARAT FORGE Announces Quarterly Results (1QFY20); Net Profit Down 25.7% (Quarterly Result Update)

Aug 14, 2019 | Updated on Aug 14, 2019

For the quarter ended June 2019, BHARAT FORGE has posted a net profit of Rs 2 bn (down 25.7% YoY). Sales on the other hand came in at Rs 13 bn (down 9.0% YoY). Read on for a complete analysis of BHARAT FORGE's quarterly results.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

BHARAT FORGE SHARE PRICE


Sep 25, 2020 11:57 AM

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