Bharat Forge (BFL) reported dismal Q4FY20 results. Standalone revenues came in at Rs. 881 crore, down 47.2% YoY (domestic sales down 43.8%, export sales down 49.1%) tracking a 36% drop in tonnage to 40,173 MT. Standalone EBITDA margins were at a new low of 12.5% - a 937 bps sequential fall courtesy major toll extracted by negative operating leverage (employee costs, other expenses rose 250 bps, 890 bps, respectively QoQ on percentage of sales basis). Reported loss at the PAT level was at Rs. 73.3 crore, tracking a fall in revenues and margins and a charge of Rs. 89 crore taken for impairment of investments in an associate. BFL said the lockdown impacted sales, profitability to the tune of Rs. 200 crore, Rs. 90 crore, respectively, during the quarter, while overseas operations would post €5 million cash loss during H1CY20.
Valuation & Outlook
For BFL, we expect -3.4%, 1.8%, 15.4% CAGR for consolidated sales, EBITDA, PAT, respectively, in FY20P-22E. Further progress on business de-risking from CV and improvement in financials of European subsidiaries are key monitorables going ahead, although margin initiatives are a positive. We maintain HOLD rating on BFL, valuing it at 30x FY22E EPS of Rs. 10 for target price of Rs. 300.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BharatForge_Q4FY20.pdf
Shares of BHARAT FORGE LTD. was last trading in BSE at Rs.337.45 as compared to the previous close of Rs. 318.95. The total number of shares traded during the day was 363916 in over 5741 trades.
The stock hit an intraday high of Rs. 341.65 and intraday low of 319.5. The net turnover during the day was Rs. 120384619.