- Bharat Forge Limited (BF L) is the flagship company of the USD 2.5 billion Kalyani Group and a global provider of high performance, innovative, safety critical components and solutions to various industrial sectors including Automotive, Railways, Power, Defence, Construction & Mining, Aerospace, Marine and Oil & Gas.
- Revenue for the quarter increased by 40.46% at Rs.l3905.50 mn from Rs.9900.10 mn, when compared with the prior year period. During the quarter, EBIDTA is Rs.4382.60 mn as against Rs.2813.40 mn in the corresponding period of the previous year.
- During Q3 FY18, Profit before tax increased at Rs.3432.30 mn as compared to Rs.l891.70 mn in Q3 FY17.
- During Q3 FY18, net profit increased by 77.40% to Rs.2281.70 mn from Rs.l286.20 mn in the corresponding quarter of previous year.
- Cash of the company increased to Rs. 15189 mn as on 31St Dec 17 which was at Rs. 14184 mn in the preceeding 9 months period.
- Long Term Debt of the company reduced at Rs. 13133 mn Q3 FY 18 as against Rs. 15220 mn in 31St Mar 2017.
- Domestic revenue of the company rose by 32.9% at Rs. 5769 mn in Q3 FY 18 from Ra. 4342 mn in the Q3 of FY 17.
- For 9M FY 18 the revenue of the company rose by 35.50% at Rs. 39063.40 mn as against Rs. 2882950 mn in the corresponding previous year 9 months.
- PAT during 9 months period rose by 60.76% at Rs.6069.70 mn from Rs. 3775.70 mn in 9M FY17. YTD FY2018, BFL has secured new business wins worth US$ 100 mn across export and domestic business have been garnered from Passenger Vehicles & Industrial sector (Aerospace and Oil Gas).
- Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 31% over 2016 to 2019E, respectively.
Outlook and Valuation
At the current market price of Rs. 761.90, the stock P/E ratio is at 40.57x F Y18E and 35.11 x F Y19E respectively.
Earning per share (EPS) of the company for the earnings for FY18E and FY19E are seen at Rs. 18.78 and Rs. 21.70 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 31% over 2016 to 2019E, respectively.
On the basis of EV/EBITDA, the stock trades at 20.96 x for F Y18E and 18.51 x for F Y19E.
Price to Book Value of the stock is expected to be at 7.04 x and 5.87 x for F Y18E and F Y19E respectively.
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As the company looks ahead in to Q4 FY 18, expects to see continuation of strong underlying macros supporting demand improvement across geographies and businesses. Demand in Q4 is expected to be stronger compared to Q3 driven by continued growth in domestic CV cycle. Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.
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