Bharat Forge Q2 profit rises 7.6% to Rs 245 cr, but expects lower growth in second half

BHARATFORG

Auto components major Bharat Forge registered a 7.6 percent year-on-year growth in the second quarter (July-September) profit, driven by lower tax and higher other income.

Profit during the quarter increased to Rs 245 crore from Rs 227.5 crore in the same period last year.

Revenue fell sharply by 25 percent year-on-year to Rs 1,259.4 crore, as domestic business degrew 35.6 percent YoY.

Exports, which contributed 61 percent to the topline, also dropped 18.1 percent YoY to Rs 772.5 crore in the September quarter due to lower oil and gas revenues.

“The quarter gone by has been toughest period witnessed by the company in this decade. The sluggish macroeconomic environment in India resulting in weak end demand across sectors coupled with automotive OEM’s need to destock ahead of introduction of BS-VI emission standards led to demand declining continuously through the quarter,” BN Kalyani, CMD, said.

Given the prevailing environment in India and the slowdown in North America and Europe, Bharat Forge expected the second half of FY20 to be lower than the first half, he said.

“Over the next 2-3 quarters, our focus will continue on strengthening the balance sheet, free cash generation, new product development and opportunistic inorganic growth avenues,” he added.

Bharat Forge’s shipment tonnage in Q2 dropped 23.2 percent compared to year-ago.

At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) dipped 26.3 percent to Rs 320.1 crore and margin contracted 50bps to 25.4 percent in Q2FY20 YoY.

“We are using the current environment to cut costs more than earlier anticipated, which will bear results once the demand environment stabilises,” Kalyani said.

Tax expenses in the quarter fell to Rs 6.3 crore, against Rs 117.2 crore a year ago, on the back of the corporate tax cut.

The company reported forex gain of Rs 19.7 crore against a loss of Rs 41 crore in the same period last year. Other income grew by 46.4 percent YoY to Rs 49.5 crore in Q2FY20.

Numbers were a tad lower than expected. Revenue was estimated at Rs 1,278.6 crore and EBITDA at Rs 328.9 crore, according to an estimates of analysts polled by CNBC-TV18.

The share was quoting at Rs 447.45, down Rs 21.90, or 4.67 percent, on the BSE at 1255 hours.

News Source:- Moneycontrol

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