Bharat Forge Q2 profit flat annually

Low sales especially from its exports market and decline in revenue from industrial segment impacted Bharat Forge' second quarter results for FY16. The company's stock dipped 6% at Rs 814.9.

The company reported a flat profit after tax for the quarter at Rs 175 crore, compared to Rs 174.5 crore in the corresponding quarter last financial year. On sequential basis the company's net profit dropped 10.4% from Rs 195.4 crore.

Revenue were down 1.9% at Rs 1,116.8 crore from Rs 1138.3 crore in the same quarter last year. Compared to the preceding quarter (ended June 30, 2015) revenue fell 1% from Rs 1,128.5 crore.

"The sales development during the quarter was lower than initially anticipated due to high volatility across multiple sectors and geographies, particularly all industrial sectors. As a result, sales during the quarter were marginally lower," said Baba Kalyani, CMD, Bharat Forge.

Total revenues decreased mainly due to decline in revenues from the industrial segment on account of the downturn in commodity prices. Performance in the domestic markets remained fairly strong with revenues increasing by 10.3% as compared to Q2 FY15, said the company.

However, exports revenue fell by 8.5% on a year-on-year basis and 4.4% sequentially. The export revenues from the industrial business declined by 32% on a YoY basis to Rs 2,344 million.

"Entering into H2 FY16, we anticipate demand trend to be similar to H1 FY16. Global macro uncertainty and its adverse impact on demand in the Industrial sector will be compensated to some extent by positive automotive demand and ramp up of passenger vehicle business. We have identified new segments within the industrial sector both in India & globally and have started achieving initial breakthroughs, the results of which will be visible in the medium term. We are quite confident that these measures will ensure that the company returns to high growth trajectory with the recovery in global markets," said Kalyani.