Shares of Bharat Forge fall 14% on growth concerns in FY25

Shares of Bharat Forge fell 14% to Rs 1,148.80. The management said it expects the momentum to moderate in both domestic & Export markets across industries going Q4 and FY25. 

"Looking ahead in the Q4 and further into FY25, we expect the growth momentum to moderate in both the domestic and export market across industries. Our endeavour will be to outperform the market, driven by our diversified business mix," the company added. 

“During the quarter, the company delivered a strong performance with sales growing by 15.9% to Rs 2,263 crore and EBITDA growing by 30.9% to Rs 645
crore. EBITDA margins at 28.5% expanded by 330 bps driven by favourable product mix and focus on cost optimisation. The balance sheet continues to remain very healthy with Cash on books of around Rs 1,000 crore (Net of Long-Term Loans). At a consolidated level, Revenues have grown by 15% to Rs 3,867 Crores and EBITDA grew by 56% to Rs 673 crore .

Exports from Indian manufacturing operations across components, defence and Industrial in Q3 FY24 stands at US$ 200 million, a growth of 36% over Q3 FY23. Over time, We expect this number to grow as the new verticals scale up and we enhance our presence in the industrial space.

For 9M FY2024, standalone sales have grown by 19% to Rs 6,640 crore and EBITDA grew by 29% to Rs 1,815 crore. A key driver of this growth has been the successful ramp-up of the defence business, in addition to the growth in the core forging business. 

During the quarter, the company has secured new business worth Rs 550 crore across Automotive, Industrial, Defence, Aerospace and Castings (Ferrous & Aluminum).

In the overseas operations, we have been able to achieve improvement in operational parameters at the Aluminum business in Europe and the same is expected in the US plant soon.

We continue to work on creating a sustained path to profitability for the overseas business driven by a combination of achieving profitability in the aluminum business and product/manufacturing optimisation in the steel business, all expected to materialise in the next 12 – 18 months.