Bharat Forge Q2 Results Review - Industrial, Defence Story To Unfold Slowly: Reliance Securities
Incremental revenues from new defence order, strong double-digit growth in high margin industrial business-the biggest triggers.
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Reliance Securities Report
Bharat Forge Ltd. delivered a subdued operating performance in Q2 FY23 with its Ebitda margin coming in at 13.9% (down 605 basis points YoY/down 143 bps QoQ), versus our estimate of 17%.
Its consolidated revenue grew by 29% YoY (up 8% QoQ) to Rs 30.8 billion, as against our estimate of Rs 28.9 billion. Its standalone revenue grew by 16% YoY (up 6% QoQ) to Rs 18.6 billion.
Consolidated Ebitda de-grew by 10% YoY and 2% QoQ to Rs 4.3 billion due to higher cost across cost centres i.e. higher raw material prices, higher other expenses and high employee cost.
Its raw material/sales grew 560 bps YoY and 50 bps QoQ to 44.2%.
Bharat Forge’s reported profit after tax stood at Rs 1.45 billion while adjusted profit after tax degrew 41% YoY (down 17% QoQ) to Rs 1.4 billion, 40% below our estimate of Rs 2.4 billion.
We expect positive momentum in automobile production to continue with semiconductor shortage easing out in coming quarters.
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