Bharat Forge Q1 net profit vaults 60% to Rs145 crore

Bharat Forge has reported a quarterly net profit of Rs145 crore for the April-June 2014-15 period, a sharp 60 per cent increase compared to the similar quarter of the previous year and a 21.8 per cent increase compared to the previous quarter (January-March 2013-14).

Revenues of the company increased by 6.2 per cent in the first quarter of the current financial year to Rs988.1 crore compared to Q4 FY14 helped by an 8.6 per cent improvement in export and 4.2 per cent improvement in domestic revenues.

EBITDA during the quarter grew 26.2 per cent to Rs290.8 crore on a sequential basis. EBITDA margins expanded by 460 bps on the back of favorable product mix and exchange realisation and increased capacity utilization, the company said in a web site release.

Profit before tax and before forex gains / losses increased by 27.3 per cent in Q1 of FY15 to Rs217.6 crore, compared to the previous quarter.

Bharat Forge saw its Q1 shipment rise 2.3 per cent quarter-on-quarter to 49,123 tonnes compared to the previous quarter despite the continued depressed demand across segments of the automotive industry despite the reduction in the excise duty from 12 per cent to 10 per cent, which was expected to act as a catalyst in reviving the sector outlook in the near to medium term.

B N Kalyani, chairman and managing director of the company commented, ''Q1 FY15 witnessed sequential growth across major product segments and geographies in line with expectation with Industrial segment revenue contribution at 46 per cent for the quarter. The sales improvement coupled with a favorable product mix resulted in improvement in EBITDA percentage and robust operating cash flow. We continue to develop newer products at our R&D and innovation center for global markets focusing on improving endurance & product performance. We expect that these products will get introduced in the next two quarters.

''Currently we are witnessing a strong order pipeline across all product segments especially with global customers. We are creating a strong foundation towards achieving our medium term target of doubling sales by FY18. Looking ahead into Q2, we expect demand to improve across all segment  with volumes increasing compared to Q1 FY15, except the domestic automotive market where improvement may take some more time.''

The CV sector volumes declined 7.4 per cent and 15.4 per cent on a sequential and YoY basis respectively, clearly a sign of the weak freight movement and other headwinds. Hopefully with industrial growth starting to show signs of revival as visible from the past few month data and GDP growth expected to head northbound in a steady manner, the sector outlook for the rest of the year is looking positive.

Despite the unfavorable demand environment, the company's performance continues to outshine the underlying market performance. Automotive revenue in Q1 FY15 grew 5.3 per cent on a sequential basis and 1.8 per cent compared to Q1 of FY14.

''The CV market in North America continues to be robust on back of sustained levels of construction activity and improving economic activity. It is also being aided by the replacement of older fleets with more fuel efficient models. The EU markets has been soft in 6 months till June 2014 due to the pre buy effect however OEM's are indicating a revival in the second half. Overall, we expect the NA truck market to register a strong double digit growth while EU is expected to witness volumes similar to CY 2013,'' Bharat Forge said in a release.

BFL said it would continue to focus on enhancing its presence outside of its traditional market and simultaneously focusing on increasing share of business with our existing marquee clients and new client additions.