Bharat Forge beats estimates with robust revenue, profit growth in Q4

Auto component maker Bharat Forge posted better-than-expected results for the three months ended March 31, boosted by strong sales and stable margins despite the rising cost of materials due to the commodity price increase.

Bharat Forge posted a standalone net profit of Rs 262 crore, sporting a nearly 28% growth, compared with Rs 205.4 crore in the same quarter a year ago. Analysts were expecting profit to grow around 9-10%.

At the same time, operating profit rose a healthy 29.3% to 430.8 crore as against Rs 333.2 crore in the January-March 2021 period.

Bharat Forge’s revenue, too, shot up to Rs 1,674.1 crore in Q4FY22, up 28% as compared with Q4FY21 on the back of 26.7% growth in domestic revenue and 28.5% growth in export revenue. Analysts were expecting revenue to grow around 20%.

The company's share price rose nearly 4% in mid-day trades in a strong Mumbai market on Monday.

Other Key Highlights

1) EBITDA margins at 25.7% in Q4 FY22 improved marginally as compared with both Q3 FY22 and Q4 FY21.

2) Domestic business was boosted by over 50% growth in industrials segment anchored by demand for medical cylinders, though automotive business also grew in double digits.

3) International business was powered by growth in industrials business that doubled during the quarter. This growth was primarily led by recovery in shale gas drilling in the North American market.

Management Commentary

BN Kalyani, Chairman and Managing Director of Bharat Forge, said the company ended the year on a strong note with its top line growing by 28% driven by pickup in both domestic and export markets.

In FY22, the Indian operations has secured new orders worth about Rs 1,000 crore across automotive and industrial application. This includes a healthy mix of existing and new customers across traditional and new products.

In the international operations, new orders worth $150 million have been secured across steel and aluminium forging operations in North America. “These order wins from marquee OEMs provides a lot of growth visibility in the medium to long term,” he said.

Kalyani also said that the EV vertical has secured orders from a global original equipment manufacturer for supply of aluminium castings and a maiden order from an Indian automaker for supply of DC-DC converters.

“At a consolidated level, we expect FY2023 to be a strong year characterized by top-line growth coupled with strong cash flows, ramp up of the US aluminium operations, revenue contribution from the newer verticals and a further diversified revenue mix,” he said.

“For the standalone business, we expect continued growth in the key markets across all sectors. Easing of cost pressures & supply chain tightness will provide a fillip to the end demand across geographies,” he added.