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Informist, Monday, Nov. 4, 2024

By Darshan Nakhwa

MUMBAI – Bharat Forge Ltd. is expected to report year-on-year improvement in key earnings parameters for the September quarter, primarily driven by defence and industrial businesses, which are likely to partially offset the impact of weakness in the passenger and commercial vehicle businesses, according to analysts. The Pune-based company is expected to clock a net profit of INR 3.91 billion in Jul-Sept, up 13% from a year ago, according to an average of estimates from six brokerages. Its revenue is seen at INR 23.48 billion, up 4.4% on year.

Among the estimates, the highest projection for the bottom line during Jul-Sept is INR 4.06 billion from YES Securities (India) Ltd., while the lowest is INR 3.62 billion from Nomura Equity Research. The highest and the lowest estimates for the top line are INR 24.50 billion from Motilal Oswal Financial Services Ltd. and INR 22.27 billion from Nomura, respectively.  

According to Motilal Oswal, the automotive and engineering company's revenue is expected to grow 9% on year in Jul-Sept and would primarily be driven by a ramp-up in defence export orders. Most of its other segments, including commercial and passenger vehicles are seeing weak demand in domestic and export markets. 

Kotak Institutional Equities expects Bharat Forge's standalone revenue to grow by 3% on year, led by 19% on-year increase in domestic segment revenues driven by strong growth in the non-auto business especially the defence business. However, the brokerage firm expects the company's export revenue to fall by 9% on year due to decline in commercial and passenger production volumes.

On a sequential basis, Bharat Forge is expected to report mixed financial performance. While its bottom line is likely to surge 45% on quarter, its top line is seen flat. "We expect standalone revenue to grow 2.3% on quarter driven by 1.8% quarter-on-quarter growth in shipment tonnage to 68,700 tn along with 0.5% sequential increase in realisations to INR 348,100/ton," YES Securities said in a pre-earnings note.   

On the profitability front, the company's earnings before interest, tax, depreciation, and amortisation for Jul-Sept is seen at INR 6.58 billion, according to an average of estimates from five brokerages. In the year-ago period, its EBITDA was INR 6.11 billion, and it was INR 6.52 billion in Apr-Jun.

Bharat Forge's EBITDA margin is expected to expand to 28% from 27.2% in the year-ago period, and 27.9% in Apr-Jun, according to an average of estimates from five brokerages. Analysts expect the company's EBITDA margin to expand year-on-year on account of commodity tailwinds, cost control measures, and better mix. 

Bharat Forge has not yet announced when it will detail its Jul-Sept earnings. On Monday, shares of the company closed at INR 1,422.90 on the National Stock Exchange, up 0.3%. The company's stock had gained 6.3% after its June quarter earnings announcement. The stock has since lost all its gains. 

Following are the Jul-Sept earnings estimates for Bharat Forge, in INR million, from six brokerage firms: 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vidhi Verma

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