Bharat Forge Ltd (Q4 FY12)

India Infoline News Service | Mumbai |

Bharat Forge Ltd (BFL) reported net sales growth of 19% yoy driven by a volume growth of 11.7% yoy and 7% higher blended realizations.

CMP Rs319, Target Rs368, Upside 15.5% 
  • Bharat Forge Ltd (BFL) reported net sales growth of 19% yoy driven by a volume growth of 11.7% yoy and 7% higher blended realizations. Export growth was very strong with a 27.8% yoy jump in revenues. For the year as a whole exports grew by 42%. Amongst the export markets, US registered a 48% growth while Europe remained flat yoy.
  • An impairment provision of Rs704mn has been made towards the investment in North American operations and a decision against any further investment in these operations has been taken by the management. Net profit adjusted for the impairment has grown by 24.8% yoy. OPM was higher by 165bps yoy and 28bps qoq to 25.7% on the back of benefits of operating leverage and better product mix. Raw material costs as a percentage of sales were lower by 105bps yoy.
  • Non-automotive revenue contribution stood at Rs12,885mn in FY12, forming 38% of standalone entity revenues, and reflecting a growth of 32%. The exports in this segment grew by 37% in FY12.
  • Despite the slowdown being observed in domestic CV industry, LCV segment has been growing in double digits and company is gaining market share in this segment. European, Chinese automotive markets are expected to be sluggish while US markets are expected to remain strong. Growth in exports is expected on back of non auto businesses.
  • There would be no new capital expenditure taken up in FY13 and the focus would be on asset utilization and improving the productivity. Company aims to focus on value addition and look for opportunities at product level instead of being a component supplier. In FY12, 44% of the products shipped were value added products and this in a way is reflected by the higher realizations achieved. On basis of value addition and cost control management expects margins to go up in FY13.
  • We upgrade our rating to BUY from Market Performer and raise our 9-month price target to Rs368.
Q4 FY12 results (Standalone)
(Rs m) Q4 FY12 Q4 FY11 % yoy Q3 FY12 % qoq
Tonnage (MT)   57,242   51,267   11.7   55,412   3.3
Domestic   5,441   4,783   13.8   4,971   9.5
Exports   4,576   3,582   27.8   4,644    (1.5)
Net sales   9,772   8,213   19.0   9,412   3.8
Material costs   (4,243)   (3,653)   16.2   (4,124)   2.9
Manufacturing Expense   (1,753)   (1,386)   26.5   (1,638)   7.0
Personnel costs   (634)   (599)   5.8   (625)   1.3
Other overheads   (632)   (601)   5.2   (633)   (0.0)
Operating profit    2,510   1,974   27.2   2,391   5.0
OPM (%) 25.7 24.0 165 bps 25.4 28 bps
Depreciation   (535)   (478)   11.9   (558)   (4.2)
Interest   (344)   (294)   17.1   (473)   (27.2)
Other income   145   162   (10.9)   113   27.6
PBT   1,775   1,364   30.2   1,474   20.5
Tax   (519)   (357)   45.5   (442)   17.5
Effective tax rate (%) 29.3 26.2   30.0  
Adjusted PAT   1,256   1,007   24.8   1,031   21.8
Adj. PAT margin (%) 12.9 12.3 60 bps 11.0 189 bps
Exceptional items   (704)   -      -   
Reported PAT   552   1,007   (45.2)   1,031   (46.5)
Ann. EPS (Rs) 21.6   17.3   24.8   17.7   21.8
Source: Company, India Infoline Research
 
Cost analysis (Standalone)
As a % of net sales Q4 FY12 Q4 FY11 bps yoy Q3 FY12 bps qoq
Raw material 43.4 44.5 (105) 43.8 (40)
Manufacturing Expenses 17.9 16.9 106 17.4 53
Personnel Costs 6.5 7.3 (81) 6.6 (16)
Other overheads 6.5 7.3 (85) 6.7 (25)
Total costs 74.3 76.0 (165) 74.6 (28)
Source: Company, India Infoline Research
 
Financial summary
Y/e 31 Mar (Rs m)
BSE 691.95 5.20 (0.76%)
NSE 688.85 3.20 (0.47%)

***Note: This is a NSE Chart

 

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