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June quarter standalone EBITDA came 7% above our forecast due to higher than expected
revenue on the back of higher tonnage. The exports registered a strong 64% yoy growth. We
maintain Buy as headwinds in auto business are expected to be offset by higher margin non auto
business growth.
June quarter standalone PAT surprised by 8% on higher revenues
Net sales Rs.8.6bn, +36.1% yoy and +4.4% qoq. RBS estimate was Rs.8.2bn.
The higher than expected sales was mainly due to higher tonnage sold (up 4% than
expectations) during the quarter. Realization was also 1% above expectations.
EBIDTA margin 24.3%, up 9bps qoq. RBS estimate was 24.0%.
EBIDTA Rs.2.08bn, +31.3% yoy and 4.8% qoq. RBS estimate Rs.1.96bn, so 7% above
expectation.
Depreciation expenses Rs.517mn, up 8% qoq. RBS estimate was Rs.485mn.
Interest expenses came at Rs.300mn, in line with expectations.
Other income Rs.147mn, +45% yoy and -1% qoq. RBS estimate was Rs.120mn
PBT was Rs.1.41bn, +54% yoy and 3.5% qoq. RBS estimate was Rs.1.29bn.
Tax rate were at 31.1%, vs 30.9% in 1QFY11 and 30.3% for FY11. RBS estimate was 30%.
Normalized PAT was Rs.974mn, +53% yoy but down 3% qoq. RBS estimate was Rs.903mn ;
Bloomberg consensus was at Rs.884mn.
Standalone EPS is Rs.4.2 for the quarter.
June quarter consolidated EBITDA came 4% above expectations
Consolidated revenue was at Rs.15.83bn, up 56% yoy. RBS estimate was Rs.15.58bn.
Consolidated EBITDA was Rs.2.63bn, up 42%. RBS estimate was Rs.2.54bn.
Consolidated PBT was Rs.1.52bn as against RBS forecast of Rs.1.55bn.
Management conference call highlights
Management commented that it has not seen any revision in its overseas subsidiaries orders
and that its customers are continuing to maintain their annual growth targets (US ~40% and
Europe about 15-20%) and has not changed them in the current rolling four month plans.
However, it admitted that Chinese market has seen some decline due to tightening fiscal
controls but remained hopeful about its Chinese JV future. It added that the Chinese JV has
added new customers and has started to improve the product mix.
Management further added that the Indian CV market growth estimates have revised
downwards from about 15-20% growth at the start of the year by the industry experts.
However, it said that the company could still see a 5-7% growth in this segment.
The management's plan to increase machined component capacity by 30% by December,
2012 are going as per scheduled. The increased capacity will be divided equally between
auto and non auto businesses. It also said that the company is installing a 10kt forging press
at its Pune plant.
The capex guidance is Rs.2-2.5bn for each of FY12 and FY13.
Capacity utilization during 1Q was 75-76% at old Indian facilities; about 50% at new Indian
facilities (non auto business) and about 55% at overseas facilities
Geographical break up of standalone revenue: India 55.6%; USA 17.7%; Europe 23.7% and
Asia Pacific 3%. Europe registered the highest yoy revenue growth of 108% with USA
registering 32% yoy growth.
The wholly owned subsidiaries of the companies registered a yoy growth of 50.5% to
Rs.310mn in EBITDA in 1Q. However, margins declined slightly to 5.67% from 5.80% a year
earlier.
During the quarter, the China JV registered a 14% yoy growth in EBITDA to Rs.89mn with
margins at 5.44%, fractionally lower than 5.49% in 1QFY11. The management said that
The company is planning to improve the EBITDA margins at its overseas subsidiaries to
double digit from current single digit within next 18months. The management said that it
hopes margins to increase this year also due to improved pricing and cost cutting programs
even if volume growth did not materialize on tough market conditions.
The management said that break-even capacity utilization at China JV is 40-42%.
The non auto revenue grew 51% yoy to Rs.2.84bn contributing towards 33% of standalone
revenue during the quarter, up 30% contribution from 1QFY11.
Management noted that raw material unit cost during the quarter were flat qoq.
Working capital as at the end of June was Rs.5.9bn, almost flat qoq.
The management stated that it has hedged its 60-70% full year estimated exports.
Diversification provides stability, we have Buy
We believe that Bharat Forge's increasing exposure to the non auto business and its global
presence would prove helpful in providing stability to its revenue growth. The management
has indicated that its high margin non auto business growth is expected to remain healthy
with oil & gas, energy and non auto engines being the next growth verticals. It also expects
power JVs with Alstom and NTPC to start contributing to the revenue from FY14. We maintain
Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
June quarter standalone EBITDA came 7% above our forecast due to higher than expected
revenue on the back of higher tonnage. The exports registered a strong 64% yoy growth. We
maintain Buy as headwinds in auto business are expected to be offset by higher margin non auto
business growth.
June quarter standalone PAT surprised by 8% on higher revenues
Net sales Rs.8.6bn, +36.1% yoy and +4.4% qoq. RBS estimate was Rs.8.2bn.
The higher than expected sales was mainly due to higher tonnage sold (up 4% than
expectations) during the quarter. Realization was also 1% above expectations.
EBIDTA margin 24.3%, up 9bps qoq. RBS estimate was 24.0%.
EBIDTA Rs.2.08bn, +31.3% yoy and 4.8% qoq. RBS estimate Rs.1.96bn, so 7% above
expectation.
Depreciation expenses Rs.517mn, up 8% qoq. RBS estimate was Rs.485mn.
Interest expenses came at Rs.300mn, in line with expectations.
Other income Rs.147mn, +45% yoy and -1% qoq. RBS estimate was Rs.120mn
PBT was Rs.1.41bn, +54% yoy and 3.5% qoq. RBS estimate was Rs.1.29bn.
Tax rate were at 31.1%, vs 30.9% in 1QFY11 and 30.3% for FY11. RBS estimate was 30%.
Normalized PAT was Rs.974mn, +53% yoy but down 3% qoq. RBS estimate was Rs.903mn ;
Bloomberg consensus was at Rs.884mn.
Standalone EPS is Rs.4.2 for the quarter.
June quarter consolidated EBITDA came 4% above expectations
Consolidated revenue was at Rs.15.83bn, up 56% yoy. RBS estimate was Rs.15.58bn.
Consolidated EBITDA was Rs.2.63bn, up 42%. RBS estimate was Rs.2.54bn.
Consolidated PBT was Rs.1.52bn as against RBS forecast of Rs.1.55bn.
Management conference call highlights
Management commented that it has not seen any revision in its overseas subsidiaries orders
and that its customers are continuing to maintain their annual growth targets (US ~40% and
Europe about 15-20%) and has not changed them in the current rolling four month plans.
However, it admitted that Chinese market has seen some decline due to tightening fiscal
controls but remained hopeful about its Chinese JV future. It added that the Chinese JV has
added new customers and has started to improve the product mix.
Management further added that the Indian CV market growth estimates have revised
downwards from about 15-20% growth at the start of the year by the industry experts.
However, it said that the company could still see a 5-7% growth in this segment.
The management's plan to increase machined component capacity by 30% by December,
2012 are going as per scheduled. The increased capacity will be divided equally between
auto and non auto businesses. It also said that the company is installing a 10kt forging press
at its Pune plant.
The capex guidance is Rs.2-2.5bn for each of FY12 and FY13.
Capacity utilization during 1Q was 75-76% at old Indian facilities; about 50% at new Indian
facilities (non auto business) and about 55% at overseas facilities
Geographical break up of standalone revenue: India 55.6%; USA 17.7%; Europe 23.7% and
Asia Pacific 3%. Europe registered the highest yoy revenue growth of 108% with USA
registering 32% yoy growth.
The wholly owned subsidiaries of the companies registered a yoy growth of 50.5% to
Rs.310mn in EBITDA in 1Q. However, margins declined slightly to 5.67% from 5.80% a year
earlier.
During the quarter, the China JV registered a 14% yoy growth in EBITDA to Rs.89mn with
margins at 5.44%, fractionally lower than 5.49% in 1QFY11. The management said that
The company is planning to improve the EBITDA margins at its overseas subsidiaries to
double digit from current single digit within next 18months. The management said that it
hopes margins to increase this year also due to improved pricing and cost cutting programs
even if volume growth did not materialize on tough market conditions.
The management said that break-even capacity utilization at China JV is 40-42%.
The non auto revenue grew 51% yoy to Rs.2.84bn contributing towards 33% of standalone
revenue during the quarter, up 30% contribution from 1QFY11.
Management noted that raw material unit cost during the quarter were flat qoq.
Working capital as at the end of June was Rs.5.9bn, almost flat qoq.
The management stated that it has hedged its 60-70% full year estimated exports.
Diversification provides stability, we have Buy
We believe that Bharat Forge's increasing exposure to the non auto business and its global
presence would prove helpful in providing stability to its revenue growth. The management
has indicated that its high margin non auto business growth is expected to remain healthy
with oil & gas, energy and non auto engines being the next growth verticals. It also expects
power JVs with Alstom and NTPC to start contributing to the revenue from FY14. We maintain
Buy.
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