Results for Bharat Forge Limited (BFL) met consensus estimates in Q1FY19. Standalone revenue stood at Rs1,480cr, up 23% yoy (1% qoq), in-line with consensus estimate. EBITDA grew 29% yoy (3% qoq) to Rs429cr, marginally ahead of consensus estimate of Rs418cr. EBITDA margin expanded 121bps yoy (49bps qoq) to 29% in Q1FY19. Standalone PAT was up 34% yoy (0.4% qoq) at Rs234cr, in-line with street estimate.
Given the trend in commodity price inflation, raw material cost inched up 27% yoy in Q1FY19, growing faster than the top-line. This led to 109bps yoy contraction in gross profit margin to 63.9%, while the margin remained steady sequentially.
However, the company managed to keep a lid on its operating expenses and employee costs, which led to EBITDA margin expansion of 121bps yoy and 49bps qoq.
The management stated post the result that BFL secured new orders worth Rs120cr in Q1FY19.
Conference call highlights
The domestic industrial segment was subdued due to delay in tender-based business. In Defence and Aerospace, BFL has secured tenders,
Although conversion of orders is seeing delays; the management expects a turnaround from Q2FY19.
The company is setting up an aluminium forging facility in BF PMT in Tennessee, USA, at an investment of $55mn. The facility will commence production in CY20 and will cater to the car market in North America.
Standalone capex guidance for FY19 is Rs500cr and for FY20 is Rs400cr.
BFL’s German subsidiary has secured a multi-year €40mn order for supplying aluminium forgings to a global premium OEM.
Bharat Forge Ltd is currently trading at Rs. 647.30, up by 7.9 points or 1.24% from its previous closing of Rs. 639.40 on the BSE.
The scrip opened at Rs. 647 and has touched a high and low of Rs. 652.45 and Rs. 639 respectively. So far 11,27,497 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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