Bharat Forge Analyst Update – FY14 Results

analysis of bharat forge sales to indian auto industryBFL sales to the M&HCV segment reported 11.6% decline in FY14 on a YOY basis at a rate that wasn’t as downbeat as the market. BFL has acquired new business from Passenger Vehicle OEM’s and strengthened market share with new commercial vehicle segment entrants.  The automotive industry isn’t the lone suffering wolf with slowdown having clamped industrial activity and dented capital investment.

Resultantly, demand for forged components for industrial sector across segments has compacted. Moderate growth was reported in the energy sector across sources and orders from Government agencies. Through FY ’14, revenues from the industrial segment increased by 10% to Rs 560 crores.

North America & Europe export markets had a strong end to CY13 as Heavy Truck market in both regions reported volume growth. Production of Class 8 truck in North America declined by 11.1% to around 243,000 units. Net orders in CY13 rose 17% from CY 2012 to 267,000 units. Growth in NA Heavy truck segment is expected to be ongoing on the back of strong US economy and aging fleet. The Heavy Truck market is expected to grow by 10 -15% in CY14.

European Heavy Truck segment reported volume increase of 8.3% in CY13 driven by strong growth in Q4 CY13 on account of pre-buy in advance of new emission norms that came into effect in January 2014. Growth is anticipated in H2 of CY14 despite a slow start to result in a flat year for the Heavy truck segment.

Bharat ForgeThe Wholly Owned operations have registered EBITDA% of 7.8% as against 8.5% in the previous quarter. Decline is attributed to European CV space, which declined marginally post the pre-buy in advance of Euro VI emission norms which were implemented from January 1, 2014.

Bharat Forge Aluminumtechnik GmbH & Co KG (BFAT) won a prestigious multi-year contract worth EURO 250 million from a German OEM. The order enhances the company’s presence in the fast growing aluminum components business that has been finding increasing application in passenger vehicles.

“BFL’s performance in FY14 has been encouraging with robust operating leverage and cash flows despite sub optimal utilization levels in India caused by significant weakness in the Commercial Vehicle segment. The uncertain demand environment which prevailed during FY14 is beginning to change positively especially in the external markets and we expect both North America & Europe to grow in FY15. The domestic market might witness demand recovery in 2H FY15,” said N. Kalyani, Chairman & Managing Director.

He added, “The highlight of the year is the series of order wins across segments & geographies from new and existing customers and our investments in R&D delivering path breaking solutions to our marquee customers placing us at the forefront to capture demand revival. We are witnessing strong momentum going into FY15 with topline growth expected to outpace the underlying market growth in all geographies driven by market share gains and new programs coming on stream. Looking ahead into Q1 FY15, we anticipate demand to be slightly higher compared to Q1 FY14 & Q4 FY14”


Particulars Q4FY14 Q4FY13 FY14 FY13
TotalRevenues 9,305 6,746 33,992 31,512
EBITDA 2,304 1,525 8,637 7,337
EBITDA% 24.8% 22.6% 25.4% 23.3%
PBTbeforeexceptional item 1,683 744 5,835 4,299
PAT 1,190 501 3,999 3,056
EPS 5.11 2.15 17.18 13.13


TABLE1                                                                                                                                                Rs.Million

Particulars Q4FY14         Q3FY14          Q4FY13 FY14                FY13
Shipment Tonnage




ExportRevenue OtherOperatingIncome Total Revenue


PBT% ExchangeGain/ (loss) PBTafterExGain/ (loss) Exceptional Items




48,015             42,702             37,119


3,958               3,289               3,490


5,079               4,797               3,112


268                   235                   144


9,305               8,321               6,746


2,304               2,145               1,525


24.8%              25.8%              22.6%


353                   284                   205


1,710               1,413                   851


18.4%              17.0%              12.6%


(27)                  (30)                (107)


1,683               1,383                   744


123                         –                         –


1,806               1,383                   744


1,190                   927                   501

174,808          172,030


14,571             15,025


18,482             15,867


939                   620


33,992             31,512


8,637               7,337


25.4%              23.3%


1,037                   917


5,724               4,481


16.8%              14.2%


111                (182)


5,835               4,299


123                   106


5,959               4,405


3,999               3,056