Bharat Forge Q3FY22 Results: Net Profit jumps 264% to Rs 337 crore

Bharat Forge, a leading forging company of India, today reported a 263.95 per cent year-on-year (YoY) jump in the standalone net profit of Rs 337 crore for the quarter ended December 30, 2021. It had posted a profit of Rs 92.70 crore in the corresponding quarter of the last financial year.

The forging company's revenue from operations on the standalone basis rose 54.52 per cent YoY to Rs 1,602 crore compared to Rs 1,036.72 crore posted in the year-ago quarter.

Its EBITDA (earnings before interest, taxes, depreciation, and amortisation) grew 89.76 per cent YoY to Rs 408 crore in the quarter under consideration against Rs 214.74 crore posted last year. The margin improved to 25.5 per cent in the December 2021 quarter against 20.8 per cent posted in the December 2020 quarter.

Performance of India Business

Automotive Business: The CV sector performance in the quarter came back to normalcy ably supported by pick up industrial activity and fleet utilization rates. The sector production increased by 30.3 per cent to 74,555 units in Q3 FY22. For 9M, MHCV Production at 173,433 units is an increase of 85.1 per cent as compared to the same period the previous year. Within the PV segment, the UV segment has grown by 85 per cent as compared to 9M FY21 while the Car segment has witnessed a decline of 10.3 per cent.

Over the past few years, as the PV industry has witnessed product upgrades driven by Premiumization coupled with new OEM's witnessing success with their new launches, the company's revenues from this sector have grown faster than the underlying market. For the 9M, as against the underlying market growth of 28 per cent, revenues from the PV segment has grown by around 45 per cent.

Industrials Business: In Q3 FY22, we have completed the supply of medical-grade Oxygen cylinders to the Indian government. This product revenue was Rs 150 Crores in Q3 FY22 as against Rs 69 Crores in Q2 FY22. Normalized for the supply of oxygen cylinders, industrial segment revenues were flat both sequentially and YoY despite the drop in revenues from the Agri Equipment segment.

Performance of international business

Automotive Business: The North American Class 8 truck market demand continued to remain strong with parameters such as order backlog, new orders and build rates remaining robust. For CY21, builds at 270, 640 were lower than the earlier expected levels of around 300,000. Hopefully, CY22 will witness some respite in headwinds and improvement in the supply chain situation.

The PV segment especially the premium segment continues to have chip shortage and supply chain issues. While ignoring the near-term uncertainty, this sector continues to be an interesting space where the company continues to win new orders, deepen its engagement with customers and increase its market share in the traditional powertrain and is simultaneously engaging with customers on solutions for BEV and other technologies.

Industrials Business: High crude prices albeit a dampener on overall consumer sentiment and end demand, continues to support the stable performance of the company's Oil & Gas business. We continue our endeavour to make more progress in this segment from a viewpoint of both broad basing customer and client portfolio. The construction & Mining segment is also performing well driven by strong construction-related activities globally.

Besides, Bharat Forge has entered into a power purchase agreement and shareholders' agreement dated February 9, 2022, with Avaada MHVidarbha (AMHVPL) to purchase solar power on a Single Captive User basis thereby agreeing to acquire a 26 per cent equity stake for approximately Rs. 11.37 crore in AMHVPL.

The investment is being made in compliance with the provisions of the Electricity Act, 2003 and rules made thereunder for the supply of solar power of capacity upto 32.50 MW DC equivalent to 25.0 MW AC per annum.

AMHVPL owns, operates and maintains a solar power plant for captive consumption at Village Renukapur, Distt. Yavatmal, in the state of Maharashtra.

The investment will be made by the Company to get access to renewable energy which will benefit the Company from a cost-saving perspective.