Bharat Forge slumps on posting Q4 net loss of Rs 72 cr

Bharat Forge tumbled 10.25% to Rs 316.50 after the company reported consolidated net loss of Rs 72.09 crore in Q4 FY20 compared with net profit of Rs 320.35 crore in Q4 FY19.

Net sales declined 34.7% year-on-year (YoY) to Rs 1741.92 during the quarter. Pre-tax loss in Q4 March 2020 stood at Rs 62.84 crore as against a pre-tax profit of Rs 492.97 crore in Q4 March 2019. Income tax expense fell 96.6% YoY to Rs 5.74 crore in the March quarter.

On a standalone basis, the company reported a net loss of Rs 73.20 crore in Q4 March 2020 compared with net profit of Rs 299.50 crore in Q4 March 2019. Total revenues declined by 47.2% in Q4 FY20 to Rs 881.20 crore from Rs 1668.6 crore in Q4 FY19.

The performance for Q4 & FY20 has been impacted by the lockdown in the last week of March. The company estimates that sales loss was to the tune of Rs 200 crore and impact on profitability of Rs 90 crore.

The firm reported one-time expense of Rs 4.91 crore towards 'Voluntary Separation Scheme' implemented at Mundhwa Plant of the company in standalone financial results. The consolidated results includes an amount of Rs 26.41 crore as one-time expense on manpower optimization in an overseas subsidiary.

Further, the company provided an amount of Rs 89 crore towards impairment of its investment in Tevva Motors Jersey (Tevva) an associate, which is a start-up company for modular electrification systems for medium duty commercial vehicles. Tevva has been severely affected due to COVID crisis. While Tevva's technology platform is evolving, its financing and commercial outlook remains uncertain now. Consequently, as a matter of prudence, the company has provided Rs 89 crore in standalone financial results. It has an impact of Rs 47.58 crore in the consolidated financial results after adjusting the losses already considered.

Standalone EBIDTA fell 69.4% in the fourth quarter to Rs 148.20 crore from Rs 484.90 crore in the same period last year. EBIDTA margin stood at 16.8% in Q4 FY20 as against 29.1% in Q4 FY19.

B.N. Kalyani, chairman & managing director, Bharat Forge, said: "The unprecedented events over the past few months and the subsequent lockdown has completely reversed the positive momentum we had started witnessing across some of our key verticals especially in India. All our facilities in India and globally have resumed operations in a phased manner since early May 2020, however, with utilization at sub-optimal levels.

FY21 has started on a difficult note with the lockdown impacting demand. Automotive production across Commercial & Passenger Vehicles Globally have been severely impacted. However, we expect the PV business to outperform underlying markets. We expect to see good demand traction in several industrial segments barring Oil & Gas sector. We are hopeful that sequentially things will start to improve from H2 FY21, as economies open up & stabilize.

Over the past few years, the company invested over Rs 1,300 crore in setting up new capacities across forging and machining. Our focus will be on filling up these capacities and generate Free Cash Flow which will be utilized for bringing down gross debt levels over the next 3-5 years."

Bharat Forge is a multinational company involved in automotives, power, oil & gas, construction & mining, locomotive, marine, defense and aerospace industries.

Powered by Capital Market - Live News