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India Equity Research Reports, IPO and Stock News
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R o b u s t p e r f o r m a n c e … y e t a g a i n ! ! !
Bharat Forge (BFL) reported its Q3FY12 results, which were above our
estimates. Net sales came in at | 920.6 crore (I-direct estimate: | 905.8
crore) reflecting a 22.1% YoY growth driven by a robust export
performance (up 29.3% YoY). Tonnage shipments rose 15.2% YoY and
3.1% QoQ to 55,412 tonnes. EBITDA margins improved 100 bps QoQ to
24.7% despite considering an exchange loss of | 7 crore. The margin
expansion can be attributed to a better product mix (shift towards heavier
products) and higher value addition through increased machining
content. The non-auto growth was subdued at 12.7% YoY to | 318 crore
due to lack of capital investments in India. The PAT came slightly above
our estimates at | 103.1 crore (I-direct estimate: | 97.9 crore) a jump of
24.8% YoY.
Highlights of the quarter
During the quarter, the automotive segment witnessed strong traction in
both domestic and export markets. The domestic M&HCV industry
witnessed robust 15.8% YoY growth in Q3FY12. With the possibility of
interest rate cuts by H2CY12, the domestic outlook seems buoyant. On
the export front, growth was primarily driven by North American &
European markets with the heavy truck segment witnessing strong
growth. Non-auto sales (~35% of total revenues) were driven by strong
demand from verticals like oil & gas, locomotive, renewable energy,
metals, etc. BFL plans to improve its machining mix in both non-auto
(~30%) and automotive (~65%) segments. Capacity utilisation levels in
India for auto & non-auto segments stand at ~80% & ~60%, respectively.
V a l u a t i o n
Increasing penetration of global customers and subsequent client
additions mitigate the business risk substantially for BFL. We have
factored in demand sustenance in the domestic M&HCV segment coupled
with robust growth in the non-auto division. At the CMP of | 308, the
stock is trading at 12.8x FY13E consolidated EPS. Using SOTP, we have
valued the standalone business at 15.0x FY13 EPS at | 326/share and
subsidiaries and Alstom JV combined at | 29/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 �� ��
PDF LINK for report- click HERE
R o b u s t p e r f o r m a n c e … y e t a g a i n ! ! !
Bharat Forge (BFL) reported its Q3FY12 results, which were above our
estimates. Net sales came in at | 920.6 crore (I-direct estimate: | 905.8
crore) reflecting a 22.1% YoY growth driven by a robust export
performance (up 29.3% YoY). Tonnage shipments rose 15.2% YoY and
3.1% QoQ to 55,412 tonnes. EBITDA margins improved 100 bps QoQ to
24.7% despite considering an exchange loss of | 7 crore. The margin
expansion can be attributed to a better product mix (shift towards heavier
products) and higher value addition through increased machining
content. The non-auto growth was subdued at 12.7% YoY to | 318 crore
due to lack of capital investments in India. The PAT came slightly above
our estimates at | 103.1 crore (I-direct estimate: | 97.9 crore) a jump of
24.8% YoY.
Highlights of the quarter
During the quarter, the automotive segment witnessed strong traction in
both domestic and export markets. The domestic M&HCV industry
witnessed robust 15.8% YoY growth in Q3FY12. With the possibility of
interest rate cuts by H2CY12, the domestic outlook seems buoyant. On
the export front, growth was primarily driven by North American &
European markets with the heavy truck segment witnessing strong
growth. Non-auto sales (~35% of total revenues) were driven by strong
demand from verticals like oil & gas, locomotive, renewable energy,
metals, etc. BFL plans to improve its machining mix in both non-auto
(~30%) and automotive (~65%) segments. Capacity utilisation levels in
India for auto & non-auto segments stand at ~80% & ~60%, respectively.
V a l u a t i o n
Increasing penetration of global customers and subsequent client
additions mitigate the business risk substantially for BFL. We have
factored in demand sustenance in the domestic M&HCV segment coupled
with robust growth in the non-auto division. At the CMP of | 308, the
stock is trading at 12.8x FY13E consolidated EPS. Using SOTP, we have
valued the standalone business at 15.0x FY13 EPS at | 326/share and
subsidiaries and Alstom JV combined at | 29/share. Our target price of
| 320 implies an upside potential of 13%. We maintain BUY rating on BFL.
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