Kalyani Group-Backed Auto Company Falls 8% Despite 19% Revenue Growth
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Bharat Forge share price fell 8% after Q1 results as a ₹358 crore exceptional loss pushed the company into a ₹90 crore net loss, while EBITDA and margins missed market expectations.
✨ Key Takeaways
Bharat Forge share price fell sharply during Intraday trade on August 10 after the company announced its June quarter results. The stock, which had been trading in a consolidation phase ahead of the results, came under selling pressure following the announcement.
The shares touched an intraday low of ₹2,071 as of 2:50 pm, compared with the previous close of ₹2,265.20. This represented a decline of 8.57 per cent.
The fall came despite the company reporting strong revenue growth during the quarter, as a sharp impact from exceptional items pushed Bharat Forge into a net loss. EBITDA also came in below market expectations.
Company Reports Net Loss of ₹90 Crore
On a consolidated basis, Bharat Forge reported a net loss of ₹90 crore for the quarter, compared with a net profit of ₹284 crore in the same quarter last year.
The result was also below market expectations. A market estimates poll had pegged the company to report a net profit of ₹349 crore for the quarter.
The company’s bottom line was impacted by multiple one-off items, which resulted in an exceptional loss of ₹358 crore during the quarter.
Revenue Rises 19%
Despite the pressure on profitability, Bharat Forge reported healthy growth in revenue.
Consolidated revenue stood at ₹4,640 crore, registering a growth of 18.7 per cent from the year-ago period. The figure was also ahead of the market estimate of ₹4,591 crore.
The revenue growth, however, did not translate into a similar improvement in operating profitability, with margins remaining under pressure during the quarter.
EBITDA Misses Estimates
Bharat Forge reported EBITDA of ₹709.4 crore during the quarter, compared with ₹670 crore in the corresponding period last year. While EBITDA increased year-on-year, it fell short of the market estimate of ₹783 crore. The company's EBITDA margin stood at 15.29 per cent, down from the year-ago level. This represented a contraction of 170 basis points. The margin was also below the market expectation of 17 per cent.
The combination of weaker-than-expected EBITDA and margin pressure, along with the exceptional loss, weighed on investor sentiment.
Bharat Forge Plans ₹2,500 Crore Fund Raise
Alongside the Quarterly Results, the board approved a proposal to raise up to ₹2,500 crore through equity and debt instruments. The proposed fund raise will provide the company with additional capital to support its growth plans and investments.
India Business Growth Outlook Maintained
For its India business, Bharat Forge has maintained its 20 per cent to 25 per cent growth outlook for the full financial year. The company expects growth to be more pronounced during the current financial year.
Bharat Forge is also investing in expanding its manufacturing capabilities. The company is in the process of setting up dedicated forging and machining facilities with an investment outlay of around ₹1,800 crore over the next 12 to 18 months.
The new capabilities are expected to generate incremental revenue for the company in the coming years once the facilities are commissioned.
About Bharat Forge Ltd
Incorporated in 1961, Bharat Forge Ltd is the flagship company of the Pune-based Kalyani Group. The group has interests across forging, auto components, speciality steels, infrastructure, renewable energy and speciality chemicals.
Bharat Forge is among the largest forging companies in India and one of the largest globally in terms of installed capacity and revenue. The company has a diversified global customer base, including the top five commercial vehicle and passenger vehicle manufacturers globally. It also caters to major global automotive original equipment manufacturers and Tier I suppliers.
Disclaimer: The article is for informational purposes only and not investment advice.