India’s largest forging company, Bharat Forge has announced its Q1 FY2019 revenue of Rs 1,479 crore, up 23.2 percent YoY. The company says it witnessed growth in both its automotive and industrial business, and despite the inflationary pressure of raw material and energy front.
In Q1 FY2019, the company reported PAT of Rs 234 crore (+33.9%), EBITDA of Rs 428 crore (+24%) and EBITDA margin at 29 percent compared to 28.8 percent for the same period last year.
Bharat Forge says that it expects the growth momentum in the Indian automotive space to continue, the recent relaxation of overloading norms for CVs in certain states and the government’s proposal to increase truck axle load by 20-25 may cause demand volatility in the short-term.
In terms of its international business, the company says it witnessed robust growth from North American Class 8 orders, and it sees a thriving freight growth in a strong economy, increase in freight rates combined with shortage of transport capacity to continue support to demand. And it continues to see a good demand from the European market as fleet ulitisations improve on the back of increase in freight activity.
“During the quarter, we have secured new business wins of Rs 120 crore across both the domestic and export markets. Our German operations, CDP BF has secured a multi-year 40 million euro (Rs 305 crore) business win for supply of aluminium forgings for a marquee global premium vehicle manufacturer. Our focus on indigenisation of critical components and products for the defence sector is progressing well,” said Baba Kalyani, chairman and managing director, Bharat Forge.
“Bharat Forge is proud to be part of the supply chain that enabled the indigenisation of the engines for the armed forces recently. With earlier announced expansion in Nellore and Baramati, we are creating capacity well ahead of time to meet customer needs. As part of our focus on enhancing our presence in the light material space, the board has approved setting up of aluminum forging facility in Bharat Forge Pmt Technologies in Tennessee, USA. This facility will be set up at a cost of $55 million (Rs 347 crore) and will address the needs of the North American car market. This facility will commence production in CY 2020.”
“As we look ahead in to the next quarter, we expect to see demand sustaining at current elevated levels. While demand is extremely strong on the export front across sectors, domestic demand especially on the CV front could be volatile due to the recent regulatory change in axle load norms and the understanding of its impact on end demand. However, the Indian CV story remains intact,” concluded Kalyani.
During the first quarter of the current fiscal, Bharat Forge made a strategic investment of 10 million euro (Rs 76 crore) in Tevva Motors (Jersey), which manufactures electric powertrain solutions for commercial vehicles and buses in the 7.5 -14 T category. The company says it is soon to be extended for the development of new commercial vehicles, especially trucks and buses. These vehicles will actively and autonomously manage the use of the range extender by utilising Tevva’s patented software, ‘Predictive Range Extender Management System (PREMS)’, which it says will ensure only electric drive is used in low carbon zones and other city centres.
Bharat Forge says that this initiative along with its investments in Tork Motorcycles and MIRA will further help position it at the forefront in the fast-growing EV market and will enable it to identify technology trends and co-develop solutions for electric mobility in India and abroad.