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Last Updated : Feb 10, 2020 02:01 PM IST | Source: Moneycontrol.com

Bharat Forge Q3 profit plunges 59% on weak demand

Consolidated revenue was down 36.4 percent YoY to Rs 1,076.7 crore for the quarter ended December 31, 2019.

 
 
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Auto ancillary and defence company Bharat Forge on February 10 registered a massive 58.7 percent YoY decline in profit due to weak demand both in domestic and international markets. One-time expenses on manpower optimisation also proved to be a drag but the fall was limited due to lower tax rate.

Profit during the quarter declined to Rs 127.8 crore against Rs 310 crore in the same period last year, company said in its BSE filing.

Consolidated revenue was down 36.4 percent YoY to Rs 1,076.7 crore for the quarter ended December 31, 2019, with domestic revenue falling 39.5 percent and exports declining 34.9 percent YoY.

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"The quarter gone by was a repeat of the previous quarter in terms of weak end market demand and financial performance. Domestic and export revenues were down more than 30 percent in Q3FY20 compared to same quarter previous year," said Baba Kalyani, CMD.

He said the company has initiated restructuring and cost optimisation policies. "These actions coupled with investing in creating capacity towards a favourable product mix will eventually result in a sustainable and stronger business overseas."

One-time expense stood at Rs 27.6 crore on manpower optimisation, while the forex loss for the quarter came in at Rs 3.8 crore against gain of Rs 38.9 crore YoY.

The operating performance was also weak with earnings before interest, tax, depreciation and amortisation (EBITDA) falling 55.2 percent YoY to Rs 235.6 crore and margin contracting 920bps YoY to 21.9 percent in Q3FY20.

Tax expenses dropped sharply by 81.4 percent YoY to Rs 29.7 crore after adoption of new corporate tax rate.

Numbers were far below analyst expectations. Profit was estimated at Rs 168.7 crore on revenue of Rs 1,250 crore and EBITDA was expected at Rs 308.4 crore with margin at 24.6 percent for the quarter, according to the average of estimates of analysts polled by CNBC-TV18.

Baba Kalyani said looking ahead, over the next 3-6 months, the company expects demand to remain soft given the uncertainty in India due to the transition to BS VI and contiuation of weakness in North America and Europe.

However, Bharat Forge believes that the phase of sequential decline in the financial performance for the company is nearing at end and the new phase of growth will commence in FY21, he added.

The stock fell more than 6 percent immediately after earnings, but managed to recover some losses to trade at Rs 501.25, down 3.26 percent on the BSE at 13:08 hours IST.

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First Published on Feb 10, 2020 02:01 pm
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