Bharat Forge

Continues to be hit by auto slowdown

Feb 17, 2020 05:02 IST capital market

Bharat Forge has registered 26% fall in consolidated sales for the quarter ended Dec 2019 to Rs 1830.86 crore hit by continued slowdown auto sector both in Indian and key international markets as well as industrial sector. Lower sales together with 660 bps skid in operating profit margin (OPM) to 12.1%, has resulted in 52% fall in operating profit to Rs 222.28 crore. With other income stand lower by 29% to Rs 37.19 crore, the PBIDT was down by 49% to Rs 259.47 crore. With interest cost more than double (up 104%) to Rs 43.08 crore, the PBDT was down by 56% to Rs 216.40 crore. Though depreciation in absolute terms was down by 1% to Rs 130.28 crore, it as a proportion to sales stood higher and thus the PBT before EO stood lower by 76% to Rs 86.12 crore. EO Expense for the period was up at Rs 27.59 crore against nil in the corresponding previous period. And thus the PBT after EO stood lower by 84% to Rs 58.52 crore. As taxation stand lower by 93% to Rs 9.48 crore, the PAT was down by 78% to Rs 49.04 crore.

With share of loss from JV/associate stand higher by 196% to Rs 8.60 crore and minority interest being share of loss stand higher by 5% to Rs 1.36 crore, the net profit (after MI) stood lower by 81% to Rs 41.80 crore.

  • Standalone sales was down by 36% to Rs 1076.68 crore. Further with OPM contract by 920 bps to 21.9%, the fall at operating profit was 55% to Rs 235.57 crore. Eventually the PAT was down by 59% to Rs 127.81 crore hit further by lower other income, higher interest and higher depreciation (as % of sales).
  • Consolidated PAT lower than standalone PAT was largely with loss at subsidiaries level. On deducting standalone financials from that of consolidated, it was a loss of Rs 78.77 crore at PAT level (lower than a loss of Rs 89.97 crore in the corresponding previous period) on a sale of Rs 754.18 crore, which was down by 2%. The net loss for the period was inflated by an EO expense of Rs 27.59 crore towards one-time expense on manpower optimisation in an overseas subsidiary. EO expense for the corresponding previous period was nil. But for higher EO expense the loss would have been even lower for the quarter.

Nine-month performance

Consolidated sales was lower by 16% to Rs 6313.92 crore and that with 420 bps contraction in OPM to 15.3%, the operating profit was down by 34% to Rs 966.60 crore. With OI stand higher by 1% to Rs 134.19 crore, the PBIDT was down by 31% to RS 1100.79 crore. After accounting for higher interest and higher depreciation the PBT was down by 48% to Rs 573.64 crore. With EO expense stand at Rs 27.60 crore (nil in corresponding previous period) towards one-time expense on manpower optimisation in overseas subsidiary, the PBT after EO was down by 51% to Rs 546.05 crore. The taxation was down by 73% to Rs 106.72 crore and thus the fall at PAT level moderated to stand at 38% to Rs 439.33 crore. Eventually the net profit was down by 41% to Rs 421.93 crore largely due to higher share of loss in associate which was up by 381% to Rs 21.49 crore.

Management Comment

B.N. Kalyani, Chairman & Managing Director commenting on the performance for quarter ended Dec 2019 said, The quarter gone by was a repeat of the previous quarter in terms of weak end market demand and financial performance. Domestic and export revenues were down more than 30% in Q3FY20 compared to the same quarter previous year. The passenger vehicle business continues to stand out across both domestic and export markets with strong outperformance against underlying demand. The PV business grew by 8.7% compared to same quarter last year. BFLs international operations in Europe have also been badly impacted by the decline in end market demand. We have initiated restructuring and cost optimisation actions. These actions coupled with investing in creating capacity towards a favourable product mix will eventually result in a sustainable and strong business overseas. We continue to strengthen the Balance Sheet with cash of Rs 1930 crore on books as of Dec 2019 while the return ratios were sub-par driven by underutilization of capacities. Looking ahead, over the next 3-6 months, we expect demand to remain soft given the uncertainty in India due to the transition to BSVI and continuation of weakness in North America & Europe. However, we believe that the phase of sequential decline in the financial performance for the company is nearing an end and the new phase of growth will commence in FY21. The convergence of our cost reduction initiatives and business development will enable BFL to come out stronger from this current down turn.

Bharat Forge: Consolidated Results

 

1912 (3) 1812 (3) Var. (%) 1912 (9) 1812 (9) Var. (%) 1903 (12) 1803 (12) Var. (%)
Sales 1830.86 2463.99 -26 6313.92 7474.96 -16 10145.73 8357.69 21
OPM (%) 12.1 18.7 15.3 19.5 20.3 20.6
OP 222.28 461.06 -52 966.60 1461.12 -34 2055.57 1722.99 19
Other inc. 37.19 52.71 -29 134.19 133.36 1 202.79 142.01 43
PBIDT 259.47 513.77 -49 1100.79 1594.48 -31 2258.37 1865.00 21
Interest 43.08 21.16 104 125.11 90.23 39 127.22 106.53 19
PBDT 216.40 492.61 -56 975.68 1504.25 -35 2131.15 1758.47 21
Dep. 130.28 131.93 -1 402.04 393.77 2 520.79 466.88 12
PBT before EO 86.12 360.68 -76 573.64 1110.48 -48 1610.36 1291.59 25
EO Exp 27.59 0.00 27.60 0.00 0.00 95.45 -100
PBT after EO 58.52 360.68 -84 546.05 1110.48 -51 1610.36 1196.14 35
Taxation 9.48 140.82 -93 106.72 397.50 -73 566.39 441.79 28
PAT 49.04 219.86 -78 439.33 712.98 -38 1043.97 754.35 38
Share of Profit/(Loss) from Associates -8.60 -2.90 196 -21.49 -4.47 381 -11.38 -0.38 2893
Minority Interest -1.36 -1.29 5 -4.09 -3.31 24 0.42 -8.48 -105
Net profit 41.80 218.25 -81 421.93 711.81 -41 1032.17 762.45 35
EPS (Rs)* # # # # 22.2 17.7
* EPS is on current equity of Rs 93.13 crore, Face value of Rs 2
# EPS is not annualised due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Database

Bharat Forge: Standalone Results

 

1912 (3) 1812 (3) Var. (%) 1912 (9) 1812 (9) Var. (%) 1903 (12)
Sales 1076.68 1692.52 -36 3682.71 4851.39 -24 6519.99
OPM (%) 21.9 31.1 24.6 28.6 29.2
OP 235.57 525.83 -55 905.21 1388.82 -35 1906.10
Other inc. 39.78 47.85 -17 129.41 115.90 12 166.02
PBIDT 275.35 573.68 -52 1034.62 1504.72 -31 2072.11
Interest 35.59 13.55 163 103.53 70.92 46 102.41
PBDT 239.76 560.13 -57 931.09 1433.80 -35 1969.71
Dep. 82.26 90.66 -9 260.17 264.48 -2 346.63
PBT before EO 157.50 469.47 -66 670.92 1169.31 -43 1623.08
EO Exp 0.00 0.00 0.00 0.00 0.00
PBT after EO 157.50 469.47 -66 670.92 1169.31 -43 1623.08
Taxation 29.69 159.64 -81 124.10 397.54 -69 551.80
PAT 127.81 309.83 -59 546.81 771.78 -29 1071.28
EPS (Rs)* # # # # 23.0
* EPS is on current equity of Rs 93.13 crore, Face value of Rs 2
# EPS is not annualised due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Database

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