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S t r o n g p e r f o r m a n c e c o n t i n u e s …
Bharat Forge (BFL) reported a strong set of numbers with the net sales for
Q2FY12 coming above our estimates at | 881.5 crore (I-direct estimate: |
854.4 crore), up 25.9% YoY and 6.3% QoQ with higher tonnage sales
(~17% YoY rise) at 53,740. Export revenues increased significantly
~13.3% QoQ at ~|432 crore as higher non-auto sales and machining mix
improving sales and blended realisations. The domestic market sales
have witnessed lesser traction owing to inventory correction in Q2FY12
from OEM side and expect better traction, going ahead. The company
posted EBITDA margin of 23.7% (I-direct estimate: 24.0%) with a slight
increase in other expenses (up~7% QoQ). The overseas subsidiaries’
EBITDA margins improved at 5.9% (up 30 bps QoQ) as the FAW-China JV
improved productivity. The PAT came in above our estimates at | 106.4
crore (I-direct estimate: | 93.9 crore) a jump of 56.1% YoY as other
income came in higher by ~| 7 crore owing to income on hedges.
Highlights of the quarter
BFL has seen a commendable performance with de-risking of business
model towards non-auto helping reap better revenues visibility in
uncertain times. The tonnage sales have touched 53,740, which is growth
of ~17% YoY with non-auto sales touching the earlier set target of ~40%
contribution to standalone sales. Non-auto sales have been driven
through four verticals of oil& gas, marine, rail & construction segment
both in all markets. In the auto segment, BFL has witnessed a slight
moderation in domestic sales, which is expected to improve in H2FY12. In
overseas markets, it remains the market leader in engine-chassis
components which due to strong replacement demand is performing
well. BFL expects first deliveries of NTPC bulk tender to happen from
Q2FY13E onwards.
V a l u a t i o n
We have accounted for a moderate up-tick in domestic M&HCV segment
and continue to remain positive on strong non-auto growth. At CMP of |
293, the stock is trading 13.3x FY13E consolidated EPS. Using SOTP, we
have valued the standalone business at 14.0x FY13 EPS at | 293/share,
subsidiaries and Alstom JV combined at | 27/share.Our target price of |
320 implies an upside potential of 13%. We maintain BUY rating on BFL
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S t r o n g p e r f o r m a n c e c o n t i n u e s …
Bharat Forge (BFL) reported a strong set of numbers with the net sales for
Q2FY12 coming above our estimates at | 881.5 crore (I-direct estimate: |
854.4 crore), up 25.9% YoY and 6.3% QoQ with higher tonnage sales
(~17% YoY rise) at 53,740. Export revenues increased significantly
~13.3% QoQ at ~|432 crore as higher non-auto sales and machining mix
improving sales and blended realisations. The domestic market sales
have witnessed lesser traction owing to inventory correction in Q2FY12
from OEM side and expect better traction, going ahead. The company
posted EBITDA margin of 23.7% (I-direct estimate: 24.0%) with a slight
increase in other expenses (up~7% QoQ). The overseas subsidiaries’
EBITDA margins improved at 5.9% (up 30 bps QoQ) as the FAW-China JV
improved productivity. The PAT came in above our estimates at | 106.4
crore (I-direct estimate: | 93.9 crore) a jump of 56.1% YoY as other
income came in higher by ~| 7 crore owing to income on hedges.
Highlights of the quarter
BFL has seen a commendable performance with de-risking of business
model towards non-auto helping reap better revenues visibility in
uncertain times. The tonnage sales have touched 53,740, which is growth
of ~17% YoY with non-auto sales touching the earlier set target of ~40%
contribution to standalone sales. Non-auto sales have been driven
through four verticals of oil& gas, marine, rail & construction segment
both in all markets. In the auto segment, BFL has witnessed a slight
moderation in domestic sales, which is expected to improve in H2FY12. In
overseas markets, it remains the market leader in engine-chassis
components which due to strong replacement demand is performing
well. BFL expects first deliveries of NTPC bulk tender to happen from
Q2FY13E onwards.
V a l u a t i o n
We have accounted for a moderate up-tick in domestic M&HCV segment
and continue to remain positive on strong non-auto growth. At CMP of |
293, the stock is trading 13.3x FY13E consolidated EPS. Using SOTP, we
have valued the standalone business at 14.0x FY13 EPS at | 293/share,
subsidiaries and Alstom JV combined at | 27/share.Our target price of |
320 implies an upside potential of 13%. We maintain BUY rating on BFL
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