Bharat Forge shares slip 10% on weak March quarter earnings

Shares of Bharat Forge slipped 10 per cent to Rs 317 in the intra-day trade on the BSE on Monday after the company reported a consolidated net loss of Rs 68.59 crore for the quarter ended March 2020 (Q4FY20), due to lower sales and one-time exceptional loss. The company had posted a net profit of Rs 324 crore in year-ago quarter.

Consolidated revenue from operations declined 34.8 per cent year-on-year (YoY) at Rs 1,742 crore against Rs 2,671 crore in the previous year quarter.

On the heels of robust growth over the past 3 years, a routine cyclical correction in commercial vehicle markets in the US and Europe was for forecast for the calendar year (CY) 2020. This was further accentuated with the Covid lockdowns from early March 2020. The company estimates that sales loss was to the tune of Rs 200 crore and impact on the profitability was Rs 90 crore.

The management said FY21 has started on a difficult note with the lockdown impacting demand. Automotive production across commercial & passenger vehicles globally has been severely impacted.

“We are hopeful that sequentially things will start to improve from H2 FY21, as economies open up & stabilise. Although the current scenario is very different from what we have ever seen before, we are very confident that the company will come out from these difficult times stronger than before,” it said.

On a standalone basis, Bharat Forge posted a net loss of Rs 73.20 crore against a profit of Rs 299.50 crore. Total revenues declined by 47.2 per cent in Q4FY20 to Rs 881 crore as compared to Rs 1,669 crore in Q4FY19. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins contracted sharply to 16.8 per cent from 29.1 per cent in the year-ago quarter.

Exceptional item of Rs 94 crore consists of Rs 89 crore towards impairment of investments in Tevva Motors & Rs 4.9 million towards voluntary retirement scheme (VRS).