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Strong execution. Bharat Forge’s standalone net profit (`1.96 bn, up 109% yoy) was 19% above our estimates led by higher domestic and US export revenues. It has continuously beaten our estimates for the past eight quarters with better product mix and new business wins in exports. It has added one new client in the US CV market and two new OEMs in passenger-car forging. We upgrade the stock to ADD (from SELL), acknowledging that it can grow at a significant pace due to new-business wins in automotive exports and new products for Indian railways. We increase our target price to `1,150 (from `630 earlier) to capture the sharp increase in our earnings estimates.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Strong growth in US export business and better domestic product mix led to a positive surprise Standalone net sales (`12 bn, up 44% yoy) were 9% higher than our estimates. Export revenues grew 53% yoy while domestic business (including operating income) grew 32%. US export revenues grew by 113% yoy, which was a key surprise. Tonnage sold grew by 25% yoy and average realization per ton grew by 15%. The share of export revenues increased to 61.2% versus 57.7% yoy. The non-auto business contributed to 48% of standalone revenues and is likely to have grown by ~69% yoy. The rise in standalone EBITDA (`3.6 bn, up 69% yoy) was led by a 440 bps yoy increase in EBITDA margin. Gross margin improved by 110 bps yoy while operating leverage benefit played out in staff cost and other expenses. Interest expenses declined 38% yoy as the company repaid high-cost debt (`3.6 bn in 9MFY15). New business wins should lead to 18% CAGR in revenues in FY2015-17 Bharat Forge is likely to grow at a significant pace over the next few years led by (1) a recovery in commercial vehicle volumes in India, (2) onset of commercial production (of its component business) for the aviation industry (which can become a US$100 mn business in few years’ time), (3) addition of two new clients in passenger cars and one in US commercial vehicles, and (4), component business for railways (for which it is adding new capacity over the next two years). By themselves, new business wins could potentially add ~`10 bn to revenues over the next couple of years. We upgrade the stock to ADD (from SELL earlier) We have increased our consolidated earnings estimates (by 21-34% over FY2015-17) as we build in potential growth in revenues from new businesses. Therefore, we have raised our target price to `1,150 (from `630 earlier) as we roll over to December 2016 and raise our target multiple for its standalone business to 13X EV/EBITDA (from 10X earlier).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03022015ga.pdf
Strong execution. Bharat Forge’s standalone net profit (`1.96 bn, up 109% yoy) was 19% above our estimates led by higher domestic and US export revenues. It has continuously beaten our estimates for the past eight quarters with better product mix and new business wins in exports. It has added one new client in the US CV market and two new OEMs in passenger-car forging. We upgrade the stock to ADD (from SELL), acknowledging that it can grow at a significant pace due to new-business wins in automotive exports and new products for Indian railways. We increase our target price to `1,150 (from `630 earlier) to capture the sharp increase in our earnings estimates.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Strong growth in US export business and better domestic product mix led to a positive surprise Standalone net sales (`12 bn, up 44% yoy) were 9% higher than our estimates. Export revenues grew 53% yoy while domestic business (including operating income) grew 32%. US export revenues grew by 113% yoy, which was a key surprise. Tonnage sold grew by 25% yoy and average realization per ton grew by 15%. The share of export revenues increased to 61.2% versus 57.7% yoy. The non-auto business contributed to 48% of standalone revenues and is likely to have grown by ~69% yoy. The rise in standalone EBITDA (`3.6 bn, up 69% yoy) was led by a 440 bps yoy increase in EBITDA margin. Gross margin improved by 110 bps yoy while operating leverage benefit played out in staff cost and other expenses. Interest expenses declined 38% yoy as the company repaid high-cost debt (`3.6 bn in 9MFY15). New business wins should lead to 18% CAGR in revenues in FY2015-17 Bharat Forge is likely to grow at a significant pace over the next few years led by (1) a recovery in commercial vehicle volumes in India, (2) onset of commercial production (of its component business) for the aviation industry (which can become a US$100 mn business in few years’ time), (3) addition of two new clients in passenger cars and one in US commercial vehicles, and (4), component business for railways (for which it is adding new capacity over the next two years). By themselves, new business wins could potentially add ~`10 bn to revenues over the next couple of years. We upgrade the stock to ADD (from SELL earlier) We have increased our consolidated earnings estimates (by 21-34% over FY2015-17) as we build in potential growth in revenues from new businesses. Therefore, we have raised our target price to `1,150 (from `630 earlier) as we roll over to December 2016 and raise our target multiple for its standalone business to 13X EV/EBITDA (from 10X earlier).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03022015ga.pdf
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