Bharat Forge declines after Q2 PAT slides 14% YoY to Rs 268 cr

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Bharat Forge slipped 3.91% to Rs 852 after the company's standalone net profit declined 14% to Rs 268.12 crore despite of 16.02% to Rs 1,863.94 crore in Q2 FY23 over Q2 FY22.

Profit before exceptional items fell 10.57% to Rs 358.45 crore in Q2 FY23 from Rs 400.82 crore posted in the same period last year.

Total expenses spiked 25.46% year on year to Rs 1553.22 crore in Q2 FY23. Cost of material and components consumed was at Rs 886.87 crore (up 35.58% YoY) and employee benefits expenses stood at Rs 135.13 crore (up 5.98% YoY) during the quarter.

EBITDA declined marginally to Rs 452.3 crore in Q2 FY23 as against Rs 4,553 crore posted in Q2 FY22. EBITDA margin decilned to 24.3% in Q2 FY23 as compared to 28.3% recorded in the corresponding quarter previous year.

On a consoliated basis, the company's net profit tumbled 47.7% to Rs 141.56 crore from Rs 271.19 crore posted in Q2 FY22. Revenue from operations grew 29% year on year to Rs 3,076.39 crore in Q2 FY23.

B.N. Kalyani, chairman & MD of Bharat Forge, said, "The company registered a stable performance in Q2 FY23 with a 5.9% sequential growth in revenues and 10.1% sequential growth in PAT. During the quarter, we recorded our highest exports revenues at Rs 1,066.4 crore.

In Q2 FY23, the Indian operations secured new business worth approximately Rs 850 crore across automotive & industrial application, driven by market share gains in the PV business and new product introduction in the Industrial space. KSSL, the defence vertical of the company secured an export order worth US$ 155.50 million to supply Artillery Gun system to a non-conflict zone. This contract is to be executed in 3 years.

In the first quarter post acquisition, JSA has secured new orders worth approximately Rs 100 crore, with customer additions and high value-added product development being one of the key highlights. The synergistic benefits and network effects will play out fully over the coming 12- 18 months.

The performance of the European operations have been adversely impacted mainly by lower than anticipated sales volumes for the Aluminium forging business. The new Greenfield Aluminium Forging facility in North America is still in a ramp-up phase and operating at utilization levels below EBITDA break even levels. We continue to expect this business to turnaround in second half of the fiscal.

Looking ahead in to Q3 FY23, we expect stable performance across both the domestic and export markets driven by higher end market demand as compared to Q2 FY23. The European Aluminum operations performance will show gradual recovery over the next two quarters."

Bharat Forge manufactures an extensive array of critical and safety components for several sectors including automobiles (across commercial & passenger vehicle), oil & gas, aerospace, locomotives, marine, energy (across renewable and non-renewable sources), construction, mining and general engineering.

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