Views on Bharat Forge 4QFY2014 results - Angel Broking

Views of Mr. Yaresh Kothari (Research Analyst – Auto & Auto Ancillary, Angel Broking) on Bharat Forge 4QFY2014 results:

"Bharat Forge (BHFC) recorded strong performance for 4QFY2014, which was ahead of our expectations, led by a strong growth in volumes. Total volumes surged 29.4% yoy (12.4% qoq) on the back of the improvement in the domestic MHCV demand and also due to strong growth in exports. Net average realization too increased 5.8% yoy on the back of better product-mix and favorable exchange rate. As a result, standalone top-line witnessed an impressive growth of 37.9% yoy to Rs. 931cr, ahead of our expectations of Rs. 858cr. While domestic revenues grew 16.3% yoy; export revenues grew 63.2% yoy during the quarter. The export performance was boosted by a strong growth across all the key geographies with US and Europe witnessing a growth of 81.7% and 33.9% yoy respectively. EBITDA margins improved 373bp yoy to 24.8% led by cost control measures, favorable realization on the exports front, superior product-mix and operating leverage benefits. However, margins came in lower than our expectations of 25.4% as new business development and certain one-off costs adversely impacted the margins. Led by a strong operating performance and higher other income, adjusted net profit grew 112.8% yoy to Rs. 107cr, ahead of our expectations of Rs. 95cr. During the quarter, the company recorded a net exceptional gain of Rs. 12cr, accounting for which the reported net profit stood at Rs. 119cr.

We retain our positive view on the company as we believe that the domestic commercial vehicle industry is at the cusp of a revival and expect the demand environment to improve in 2HFY2015 which would be the key trigger of volume growth for the company. Additionally, the company continues to witness strong traction in exports, led by improved order inflows from most of the global truck OEMs and also due to the introduction of new products in the auto as well as the not-auto segments. Our rating and target price is currently under review."

Bharat Forge 4QFY2014 Result Review (CMP: Rs. 499/ TP: Under review/ Recommendation: Under review)

Shares of BHARAT FORGE LTD. was last trading in BSE at Rs.564.2 as compared to the previous close of Rs. 572.8. The total number of shares traded during the day was 285579 in over 4294 trades.

The stock hit an intraday high of Rs. 578.35 and intraday low of 557.35. The net turnover during the day was Rs. 160603980.

Source : Equity Bulls

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