Bharat Forge - Reinforcing The Growth Bond; Result Update Q3FY15 ::Edelweiss

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Bharat Forge (BHFC) reported robust Q3FY15 numbers. Standalone revenue jumped 44% led by 25% and 13% surge in volume and realisation, respectively. The rise was primarily driven by exports (62% of revenue) to the American market in both auto and non-auto segments. EBITDA margin catapulted 450bps led by: (1) improved realisation; (2) better product mix; and (3) higher share of machining. Earnings spurted 109% riding robust revenue and operating performance. However, overseas subsidiaries extended muted performance due to subdued demand for trucks and passenger vehicles in Europe. In the defence & aerospace business, BHFC commenced delivery of components from Q3FY15. We have raised our FY15E and FY16E earnings 7-8% each, building in higher sales led by stronger volume in both auto and non-auto segment along with ~120bps margin improvement.

Exports, non-auto continue to drive earnings; margin jumps 450bps

Revenue at INR12bn surged 44% driven by robust uptick in volumes (up 25% YoY) and realisation (up 13% YoY). Export business (62% of revenue) continued to improve- up 53%. The export growth was led by Americas (up 122%) even as Europe remained flat. Domestic revenue also rose 23% during Q3FY15. EBITDA margin catapulted 450bps to 30.2% driven by improved realization, better product mix and higher share of machining. PAT at INR2bn jumped 109% aided by strong revenue growth, operating performance and lower interest cost as BHFC continues to prune debt-repaid INR3.6bn high-cost debt in 9mFY15.

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https://www.edelweiss.in/research/Bharat-Forge--Reinforcing-The-Growth-Bond;-Result-Update-Q3FY15/28213.html