Bharat Forge: Q2FY15 Result Analysis

India’s largest forging company Bharat Forge reported robust numbers for the quarter ended September 2014.  On a consolidated basis, the bottomline of the company reported 81 per cent growth on yearly basis to stand at Rs 175 crore.

Total net sales of the company in Q2FY15 stood at Rs 1109 crore, up by 35 per cent compared to Rs 821 crore during the same period in Q2FY14.

EBITDA during the quarter grew by 15 per cent on yearly basis to stand at Rs 325 crore. EBITDA margins expanded by 216 basis points on yearly basis, on the back of favorable product mix and exchange realization, due to increasing export volume.

On the domestic front, the company’s revenue increased by 14 per cent and stood at 39 per cent of total revenue during Q2FY15 against 46 per cent during the same period a year ago. However, the export revenue showed a robust 51 per cent growth and stood at 61 per cent of total revenue during the period under review against 54 per cent during the same quarter last year.

The CV market in North America continues to be healthy on the back of sustained levels of improving economic indicators. Customer confidence in the US economy continues to grow along with freight demand and construction activity. The gradual demand recovery in European M&HCV sector that was visible during the first half of the year leveled off due to increasing concerns about the Eurozone economy, according to the company’s press release.

According to press release, Baba Kalyani, Chairman & Managing Director, Bharat Forge said, “We have generated strong operating cash flows in H1FY15 which has been used to repay high cost debts further strengthening our balance sheet. Looking ahead into Q3, we expect demand to improve across all segment with volumes increasing compared Q2FY15. We expect North America demand to increase while Europe is expected to soften a bit.”