Bharat Forge Ltd. share price target

Bharat Forge Ltd (BFL) is a leading player in the forgings industry. The company is serving several sectors including automobile, power, oil and gas, rail & marine, aerospace & defence, construction, mining, etc. BFL revenue came with a surprise as the company able to reduce its Break even point (BEP) on the backdrop of 20% utilization and stringent cost controlling measures, during the lockdown period. The Indian government's recent announcement to restrict the import of defence equipment enhances the order procurement visibility in...

Sharp cost focus expected to pay dividends Despite soft revenue performance during the quarter (~20% capacity utilisation), BFL nearly managed EBITDA breakeven in standalone and consolidated operations. Its focus on reducing breakeven levels by downsizing costs, enhancing efficiencies while simultaneously controlling capex spends is seen leading to improvement in margin trajectory. BFL expects to continue to post sequential improvement in coming quarters and return to previous margin levels on these cost initiatives. We build 17.4%...

Led by cost control, able to achieve EBITDA breakeven at ~20% utilization. 17.8k (PLe 14k) partly offset by realization growth of ~8% at Rs239k/ton (PLe came in at Rs17mn (PLe Rs182mn) while adj. loss restricted at Rs563mn (PLe Rs757mn). While the ongoing cycle is negative for core segments such of CVs (~39% of consol revenues) and Oil & gas, ramp-up is visible in PV and...

S/A revenue declined ~68% YoY to ~INR4.3b; however, EBITDA/PAT loss of ~INR74m/INR563m was reported. While tonnage declined 71% YoY, realizations grew 8% YoY (9% QoQ) to The Auto segments revenues declined 78% YoY, impacted by decline across segments, with 85%/86% and ~79%/53% declines in CV/PV (domestic and exports, respectively). The Non-Auto segments revenue declined ~51%, impacted by similar declines in both domestic and export revenues. EBITDA loss stood lower due to better fixed cost management. Higher other income and lower depreciation/interest restricted net loss. Revenue is expected to decline in 2Q on a YoY basis, but domestic revenue would be flat, with growth in Industrial, PV, Mining, and Tractor to cover for expected 67% decline in CV. Oil & Gas) would be flat in 2Q on a YoY basis. The Oil & Gas business would be lower; however, Brent sustaining above USD42/barrel could drive recovery in demand.

Bharat Forge Ltd (BFL) is a leading player in the forgings industry. The company is serving several sectors including automobile, power, oil and gas, rail & marine, aerospace, construction, mining, etc. Q4FY20 revenue de-grew by 35%YoY due to sharp decline witnessed in both the Auto and Industrial business across geographies.. Weak product mix lockdown and negative operating leverage dragged the EBITDA margin down to 8.5%(-75%YoY). Though the subdued commentary across OEM especially both the...

BFL's segmental revenue mix at standalone level for FY20 was at ~39% CV, ~37% industrial, ~16% PV, ~8% others. The CV space domestically (~11% of sales) as well as in overseas geographies (~29% of sales) remains a laggard. In India, present run rate of retail sales for M&HCVs; trails wider industry by a large margin when compared to pre-Covid levels on account of continued demand side (muted economic activity) and supply side (system overcapacity, revised axle load norms) issues. We expect the domestic CV recovery to be quite gradual in nature. In the US Class 8 truck...

Near term pain, Margin and growth levers intact Bharat Forge's (BFL) 4QFY20 consolidated EBITDA was Rs 1.48bn (-75% YoY, vs est 1.88bn), below our expectations. Weak product mix, lockdown in the 2nd half of March and negative operating leverage...

29 June 2020 Bharat Forges (BHFC) 4QFY20 results were hit across segments, which led to sharp erosion in EBITDA margins. While the worst is expected in 1HFY21, leading indicators point toward possible sharp recovery in FY22E. We believe BHFC will emerge stronger from this down-cycle, strengthen its position in the global supply chain and possibly benefit from the potential diversification from China. We have cut EPS for FY21/FY22E by 79%/16% to factor in the weakness in all the key industries that BHFC serves. Maintain S/A revenue/EBITDA/PAT declined ~47%/69%/99% to ~INR8.8b/INR1.5b/INR17m YoY. While tonnage declined 36% YoY, realizations dropped 18% YoY (-4% QoQ) to INR219.3k/t (v/s est. Auto segment revenues declined ~43% YoY, impacted by the decline across CVs/PVs 57%/19% in domestic and ~39%/18% in exports. Non-auto segment revenue declined ~56% YoY, impacted by exports plunging ~68% and domestic revenue plummeting ~38% decline. EBITDA margins declined 1,220bp YoY (-540bp QoQ) to 16.

We interacted with several automobile industry participants such as key management, experts and channel partners. While we estimate Nil dispatches in Apr-20 led by ongoing lockdown, we expect steady production recovery only in second half of May (~20-25% utilization) and gradual recovery from June onwards. However, order back log will get converted into sales quickly once the lockdown gets lifted led by higher bookings during key festive such as Gudi Padwa (key for Western states), Chaitri Navratri (key for Central, Northern and Western states) and Puthadu (Tamil new year)....

Bharat Forge Ltd (BFL) is a leading player in the forgings industry. The company is serving several sectors including automobile, power, oil and gas, rail & marine, aerospace, construction, mining, etc. Q3FY20 revenue de-grew by -25%YoY due to sharp decline witnessed in both the Auto and Industrial business across geographies.. EBITDA margin contracted by 660bps due to increase in input cost , and lower utilization resulted in higher fixed cost. BFL's new value-added order received on aluminum forging is on track...