PL First Cut - BHARAT FORGE

PL First Cut – BHARAT FORGE – *Himanshu Singh – Research Analyst, Prabhudas Lilladher Pvt Ltd*

BHARAT FORGE [BHFC IN | TP: INR955 | BUY]

First Cut 1QFY24 results – Solid beat on consensus revenue and EBITDA

Standalone revenue grew by c21% YoY to Rs. 21.3bn and came ahead of our higher than consesnsus estimates (Rs. 20.4bn) and Bloomberg consensus estimates (BBGe) (Rs. 19.4bn). Standalone EBITDA margins at 26.0% were slightly lower than our (26.4%) and higher than BBGe (25.8%). Gross margin was lower QoQ 80bps and came below our expectation, while strong control on employee cost and other expenses helped narrow the margin difference. Lower than expected other income and higher interest expenses led largely in line PAT versus PLe and came c5% higher than BBGe. On consolidated levels revenue and margin beat was much higher as the international subsidiaries have likely started to recover.

PL View:

Overall, strong numbers on both standalone and consolidated side. Margins have contracted QoQ on standalone side, largely led by higher RM cost. On the consolidated side, international subsidiaries have likely recovered faster than expected on both topline and margins. Interest expenses have increased and remained at higher levels.

Standalone Financial performance vs PLe:

Revenue grew YoY by 20.9% to Rs. 21bn, and QoQ by 6.5%, and grew vs PLe at 4.3%

EBITDA grew YoY by 20.2% to Rs. 06bn, and QoQ by 5.8%, and grew vs PLe at 2.7%

APAT grew YoY by 16.5% to Rs. 03bn, and QoQ by 2.3%, and was flattish vs PLe at -0.9%

EBITDA margin contracted YoY by -15 bps to 26.0%, and QoQ by -17 bps, and contracted vs PLe at -40bps

Consolidated Financial performance vs PLe:

Revenue grew YoY by 36% to Rs. 39bn, and QoQ by 6.8%, and grew vs PLe at 10.3%

EBITDA grew YoY by 44.3% to Rs. 06bn, and QoQ by 29.1%, and grew vs PLe at 12.2%

APAT grew YoY by 44.5% to Rs. 02bn, and QoQ by 20.6%, and was flattish vs PLe at -0.2%

EBITDA margin expanded YoY by 92 bps to 15.9%, and QoQ by 275 bps, and expanded vs PLe at 27bps