Analyst Meet / AGM     08-May-24
Conference Call
Bharat Forge
Growth outlook remains positive in FY25 supported by strong defence business and ramp-up of exports

Bharat Forge hosted a conference call on May 8, 2024. In the conference call the company was represented by, Mr. Amit B Kalyani- Deputy Managing Director, Mr. Subodh Tandale- Executive Director and Mr. Kedar Dixit- Sr. VP & CFO.

Key takeaways of the call

In FY24, the company reported strong performance driven by execution on defence export order and the continued strong ramp-up of exports business across all business segments except Oil & Gas.

The company’s group’s defence business recorded revenues of Rs 1,561 crore, a near 4X jump as compared to FY23.

The company secured new orders worth Rs 4,494 crore across artillery systems, armored vehicles and consumables. The executable order book stands at Rs 5192 crore as of March 31, 2024.

In Q4 FY24, EBITDA margin increased driven by improved product mix.

In Indian automotive business, the company reported mild revenue accretion in its CV business. Management intends to growth is in-line with the market, which is likely to see more activity as the election process concludes and Capex spend accelerates.

The premiumization trend in the PV segment continues, with Utility vehicles now accounting for more than 50% of the sales. Growing disposable income is likely to keep the overall premiumisation trend intact.

Export CV business remained steady in FY24 with revenue up 8.5% YoY. Order backlog, inventory and cancellation rates remain at reasonable levels.

Going ahead, North America Class 8 production is likely to remain flat with a moderately negative bias in CY24. Though inflationary pressures have abated in Europe, sustainable recovery remains elusive. BFL remains well placed to outperform the overall market.

PV export revenues in FY24 stood at Rs 1269.4 crore, up by 33% YoY. Market share gains, increased geographical footprint and value addition continued to drive the stellar performance. The company continues to deepen its client portfolio and diversify across geographies.

The Industrial segment domestic revenue increased 72% YoY in FY24. The sharp rise was driven by supply of components & products for defence application. Apart from defence, green shoots in private capex around Sugar, Cement and Steel continue to aid demand for the industrials vertical.

Industrial segment export revenue ex Oil & Gas was up 35% YoY primarily due to strong performance in construction & Mining, Aerospace, Defence and Railways.

In FY24, the industrial casting vertical secured new orders worth Rs 460 crore. Over the past 2 years, the business has made tremendous progress in reducing its customer and sector concentration and has developed a more balanced business mix across Automotive, Construction & Mining, Hydraulics & Wind energy.

The company intends to focus on building new relationships within the Industrial space targeted at Construction & Mining, Railways, and Aerospace etc.

In FY24, the Indian operations have secured new orders worth Rs 1350 crore across automotive & industrial applications. This includes a healthy mix of existing and new customers across traditional & new products.

The company has set up an AI/Digital manufacturing center, which will catalyze the engineering/ manufacturing activities and enable improvement in productivity and shorten time to market products.

Management expects FY25 to be a year of growth driven by Defence business, Industrial casting business and continued improvement in capacity utilization of the overseas business.

In Q4 FY24, America contributed 63% to total revenue, Europe 30% and Asia 7%.

The balance sheet continues to remain robust, with cash (Net of LTL) of Rs 815 Crore.

Board recommended a final dividend of Rs 6.50 per equity share of the face value of Rs 2 each (at the rate of 325%) for the financial year ended March 31, 2024. The final dividend, if approved, will be paid on or after August 14, 2024.

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