Positive outlook after robust revenue growth in Q1 makes Bharat Forge shine

Bharat Forge, an engineering company that makes components for several sectors including automobiles, oil and gas, aerospace, locomotives, marine, energy, construction and mining sectors, saw its share price shoot up over 7% and was among the top buzzing stocks by value of shares traded on Friday.

Shares of the company are now just 7% below the 52-week high after the recent pullback in sync with the rest of the Indian market.

The immediate impetus seems to have come from its first quarter financials that were declared yesterday.

How did it fare

Bharat Forge’s consolidated revenues rose nearly a third to Rs 2851.5 crore for the three months ended June 30, 2022 over the year-ago period. But EBITDA declined both sequentially and year-on-year to Rs 437.9 crore.

Its India business recorded high growth year on year, especially in commercial vehicles and industrial verticals, but on a sequential basis revenues declined.

On the flip side, the international business unit grew both sequentially and on a year-on-year basis.

“Looking ahead into Q2 FY23, we expect stable performance across both the domestic and export markets despite uncertainty arising from the macroeconomic headwinds caused by monetary tightening,” said BN Kalyani, Chairman and Managing Director of the company.

He added that the acquisition of JS Autocast was completed and this significantly enhances the company’s capabilities in the industrial and energy sector in both domestic and exports markets and also opens up new products.

During the quarter, the Indian operations secured new business worth Rs 350 crore across automotive & industrial applications. At a consolidated level, the European operations have delivered a stable performance despite high input prices and weak market conditions.

Its greenfield aluminium forging facility in North America is still in a ramp-up phase and operating at low utilization levels which has adversely impacted the overall quarterly profitability. The company said it expects this business to turn around in the second half of the fiscal year.