Bharat Forge hosted a conference call on Nov 14, 2024. In the conference call the company was represented by, Mr. Amit B Kalyani- Vice Chairman & Joint Managing Director, Mr. Subodh Tandale- Executive Director and Mr. Kedar Dixit- Sr. VP & CFO.

Key takeaways of the call

Although revenue declined by 2.3% YoY in Q2 FY25 due to weakness in the European automotive markets, EBITDA saw a growth of 10.8%.

In Q2 FY25, the group secured new orders worth Rs 1,207 crore across Defence, castings (Ferrous & Aluminum) and the core forging business.

The order wins for H1 FY25 amounts to Rs 2,216 crore with 2/3 coming from Defence & 1/3 from components business. The executable order book as of September 30th stands at Rs 5,905 Crore. The order book does not include any potential orders from domestic or export market.

JS Auto continues to register impressive operating performance during the quarter ending September 2024 with revenue growth of 32% to Rs 165 Crore compared to Q2 FY24. In H1 FY25, JSA won orders worth Rs 173 crore and is clearly benefitting from the shift of manufacturing supply chain to India. Management expect this business to continue to register strong performance in the near future.

The Overseas operations recorded sales of Rs 1145 crore. The sluggish economic condition in Europe and its impact on the automotive industry is delaying the recovery in the overseas business.

Looking ahead into H2 FY25, the company expect the performance to be stable as compared to H1 FY25 as it continue to focus on revenue growth & profitability improvement in subsidiaries (Indian & Overseas).

In H1 FY25, aerospace business revenue was approximately Rs 100 crore. Management anticipates significant growth in the aerospace segment in the coming quarters, driven by increased interest from US customers as part of the China-plus-one strategy.

In Q2 FY25, domestic revenue was up 12% YoY, while export revenue was down 9% YoY primarily led by weakness in European CVs.

In Q2 FY25, EBITDA margin remained steady due to pick up in Defence and growth in Oil & Gas.

The domestic CV business remained soft YoY as domestic demand remained sluggish. The sector has seen stupendous growth over the last 2-3 years. The government’s capex push, increased construction & manufacturing activity in the private sector augurs well for longer-term prospects of CV sector growth in India.

Domestic PVs recouped slightly on a YoY basis. The company’s focus towards building new partnerships, longer term growth in personal mobility and changing customer preferences towards more premium and safer vehicles augurs well for the company.

The Domestic Industrial segment grew by 26% YoY. Execution of defence orders drove the stellar performance. The growth was also supported by a good show in Construction-Mining/ Power generation. The outlook for the business remains promising driven by strong spend on power infrastructure and new capacity additions in the pipeline in India.

In Q2 FY25, America contributed 73% to total revenue, Europe 22% and Asia 5%.

Export CV business continued to show growth. Europe remained a pain point as growth continues to languish. Ex of Europe, CV export business reported a 14% YoY improvement indicating resilience in underlying demand from North America.

PV export business remains on course to consolidate its gains over the last three years. Despite a slack demand environment in Europe and slower momentum in North America, business delivered steady QoQ performance.

Industrial export business continued to benefit from the diversifications strategy. With the appropriate capacity mix and offerings across multiple sectors, the company hope to benefit from superior operating leverage. The demand environment (ex-Europe) remains sanguine as spend on infrastructure is a key focus area globally.

The company reported a shipment tonnage of 64,098 in Q2 FY25, a decrease of 9.1% YoY.

Capex for H1 FY25 was about Rs 820 crore.