Bharat Forge (BFL) reported a steady Q3FY21 performance. Standalone revenues came in at Rs. 1,036 crore (down 3.8% YoY) despite 8.4% YoY tonnage growth to 50,943 MT. Total India revenues were at Rs. 516 crore (up 26.5% YoY; CV up 49.4%, PV up 27.5%, industrial up 16%). Export revenues, on the other hand, were down 19.5% YoY to Rs. 512 crore (CV up 7.1%, PV down 8.4%, industrials down 60.1%). Standalone EBITDA for the quarter was at Rs. 215 crore, with consequent margins at 20.7%. Margin performance was positively impacted by operating leverage, with gross margin contraction at 70 bps. Standalone PAT was at Rs. 92.6 crore, down 27.6% YoY. At the consolidated level, BFL reported share of loss from subsidiaries/associates at Rs. 3.6 crore vs. loss of Rs. 8.6 crore in Q3FY20.
Valuation & Outlook
For BFL, we expect 25.5%, 58.9% CAGR in consolidated sales, EBITDA respectively, in FY21E-23E. We see margins at 19.4% by FY23E on mix improvement, cost actions and operating leverage benefits. Continued improvement in profitability of European subsidiaries is a key monitorable. The stock price, however, captures much positives in our view, limiting the upside potential. We therefore retain our HOLD rating on the stock valuing BFL at Rs. 670 i.e. 35x P/E on FY23E EPS of Rs. 19.1 (earlier TP: Rs. 510).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BharatForge_Q3FY21.pdf
Shares of BHARAT FORGE LTD. was last trading in BSE at Rs.625.5 as compared to the previous close of Rs. 638.4. The total number of shares traded during the day was 226250 in over 4095 trades.
The stock hit an intraday high of Rs. 651.45 and intraday low of 616.1. The net turnover during the day was Rs. 141222114.