Analyst Concall
Bharat Forge eyes acquisitions to diversify, widen reach
This story was originally published at 19:09 IST on 14 November 2024
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--Bharat Forge: Demand environment challenging in Europe, US is strong
--CONTEXT: Comments by Bharat Forge's mgmt in post-earnings analyst concall
--Bharat Forge:Eyeing acquisitions in sectors, pdts where we are not present
--Bharat Forge: Eyeing acquisitions in geographies where we're not present
--Bharat Forge: Current order book at INR 60 bln, expect it to grow in FY25
--Bharat Forge: See pick-up in orders from medium-heavy CV clients
--Bharat Forge: Revenue from India to grow at faster rate than exports FY26
By Avishek Rakshit & Ayushman Mishra
KOLKATA/MUMBAI – Bharat Forge Ltd. is eyeing acquisitions to help it enter new product categories and diversify its portfolio, Vice-Chairman and Joint Managing Director Amit Kalyani said Thursday. Companies that could help Bharat Forge enter new countries and locations would also be likely targets for acquisition, he said.
Speaking to analysts after Bharat Forge declared its financial results for Jul-Sept, Kalyani said the company is bullish on demand in India and expects good traction in the US, but the European markets are likely to remain sluggish as in Jul-Sept.
Bharat Forge posted lower-than-expected earnings for the September quarter owing to the weak European automotive market and sluggish demand in the domestic commercial vehicles business. The company's revenue and total expenses for the quarter declined year-on-year, while net profit showed some improvement on the back of better operational performance. Bharat Forge reported a net profit of INR 3.61 billion for Jul-Sept, up 4.4% on year. Analysts had estimated the company's net profit at INR 3.91 billion.
Kalyani said the company’s current order book worth INR 60 billion is expected to grow in financial year 2025-26 (Apr-Mar) as the company foresees a pick-up in orders from customers engaged in medium and heavy commercial vehicles. The order book is also expected to grow from an uptick in demand for defence-related products, he said.
According to Kalyani, the company's revenue growth from India could outpace export revenue growth in FY26. Bharat Forge reported revenue of INR 22.47 billion for Jul-Sept, marginally lower than the revenue of INR 22.49 billion recorded a year ago. Analysts had expected the company to report revenue of INR 23.48 billion. The fall in revenue is the first after 14 consecutive quarters of growth. Sequentially, the company's net profit rose 34%, while revenue was down 4%. Other income for the September quarter was INR 348.03 million, down 18% on year.
For Jul-Sept, the company reported total expenses of INR 17.93 billion, down 1.9% on year. Bharat Forge's raw material cost was INR 9.32 billion in Jul-Sept, down 11%. Other expenses were at INR 5.43 billion, up 5%. The company's employee benefit expense was up 7.4% at INR 1.61 billion. Its depreciation and amortisation expenses fell 4% to INR 1.1 billion.
For Apr-Sept, the company reported a net profit of INR 6.31 billion, up 4.1%. Its revenue for the period was INR 45.85 billion, up 4.8%. On Thursday, shares of Bharat Forge closed at INR 1,328.75 on the National Stock Exchange, up 0.6%. End
Edited by Rajeev Pai
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