Bharat Forge sinks 13% as growth concerns lead to profit booking

Looking ahead in the Q4 & further into FY25, the management said it expects the growth momentum to moderate in both Domestic & Export markets across industries.

Shares of Bharat Forge slipped 13 per cent to Rs 1,148.80 on the BSE in Monday’s intra-day trade on heavy volumes led by profit booking. 

Growth concerns were weighing on the stock as the management said it expects the momentum to moderate in both domestic & Export markets across industries going Q4 and FY25.

The average trading volumes on the counter more than doubled with a combined 4.2 million equity shares changing hands on the NSE and BSE till 02:39 pm.

“Our endeavor will be to outperform the market driven by our diversified business mix” the company added.

The stock of the castings & forgings company has slipped 14 per cent from its 52-week high level of Rs 1,330 touched in intra-day trade today.

Since April, thus far in the financial year 2023-24, the stock has outperformed the market and zoomed 73 per cent. .

During the October-December quarter (Q3FY24), Bharat Forge delivered a strong performance with standalone sales growing by 15.9 per cent year-on-year (YoY) to Rs 2,263 crore driven by 36 per cent growth in domestic revenue.

The defence business was a major contributor to the growth in revenues while the oil & gas sector and agri sector saw a decline in Q3FY24 as compared to Q3FY23, the company said.

Earnings before interest, tax, depreciation, and amortization (ebitda) grew by 30.9 per cent to Rs 645 crore. Ebitda margins at 28.5 per cent expanded by 330 bps over the previous year quarter.

Improved product mix and higher capacity utilization contributed to the superior operational performance. The company’s profit after tax grew 30.6 per cent YoY and 9.2 per cent sequentially at Rs 346 crore.

During the quarter, the company secured new business worth Rs 550 crore across automotive, industrial, defence, aerospace and castings (ferrous & aluminum).

At a consolidated level, revenues grew by 15 per cent YoY to Rs 3,867 crore and Ebitda grew by 56 per cent to Rs 673 crore. Ebitda margins have improved by 450 bps driven by initial signs of turnaround in the international businesses.

North American commercial vehicle (CV) business continued to be marginally positive. Class 8 build rates, inventory levels and sales remained steady. European CV performance was subdued as economic recovery remained patchy, the company said.