Bharat Forge Limited
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10analyst exchanges
1executives
Management on call
Amit Kalyani
DEPUTY MANAGING DIRECTOR
Key numbers — 40 extracted
1,600 crore
ghlights and then I will open up for Q&A. Highlight for Quarter 2 was our revenue was little over 1,600 crore or Rs. 16 billion which is almost double of last year same quarter and significantly higher by 17
Rs. 16 billion
en I will open up for Q&A. Highlight for Quarter 2 was our revenue was little over 1,600 crore or Rs. 16 billion which is almost double of last year same quarter and significantly higher by 17% by the previous
17%
re or Rs. 16 billion which is almost double of last year same quarter and significantly higher by 17% by the previous quarter. In terms of EBITDA our EBITDA margin at 28.3% and total EBITDA of 455 cr
28.3%
and significantly higher by 17% by the previous quarter. In terms of EBITDA our EBITDA margin at 28.3% and total EBITDA of 455 crores was significantly higher again by about 18% than the last quarter
455 crore
by 17% by the previous quarter. In terms of EBITDA our EBITDA margin at 28.3% and total EBITDA of 455 crores was significantly higher again by about 18% than the last quarter and much higher than the last
18%
our EBITDA margin at 28.3% and total EBITDA of 455 crores was significantly higher again by about 18% than the last quarter and much higher than the last year. Profit after tax at 311 crores also was
311 crore
again by about 18% than the last quarter and much higher than the last year. Profit after tax at 311 crores also was about 86% higher in the previous quarter. In terms of our overseas subsidiary we have a
86%
he last quarter and much higher than the last year. Profit after tax at 311 crores also was about 86% higher in the previous quarter. In terms of our overseas subsidiary we have a half year revenue o
1,663 crore
igher in the previous quarter. In terms of our overseas subsidiary we have a half year revenue of 1,663 crores and an EBITDA of 11.3% which is basically a result of the intense cost optimization and product
11.3%
In terms of our overseas subsidiary we have a half year revenue of 1,663 crores and an EBITDA of 11.3% which is basically a result of the intense cost optimization and product mix improvement and oper
40%
ne business the demand was robust in Q2 across sectors and geographies. Domestic revenues grew by 40% while exports grew by 4.4%. Other operating income includes 110 million of RoDTEP benefit which i
4.4%
robust in Q2 across sectors and geographies. Domestic revenues grew by 40% while exports grew by 4.4%. Other operating income includes 110 million of RoDTEP benefit which is approved from Jan 1 21 to
Guidance — 20 items
“So, we expect that as the chip shortage eases out this pent-up demand to result in higher production.”
“Here we have had an order of about a 1,000 cylinders which will be completed between Q2 and Q3 and we are now looking at creating a long-term business opportunity for this.”
“We expect this to see increased I mean see the results of this from FY23 onwards.”
“In terms of outlook we expect the standalone business to continue witnessing growth on the domestic front and the export industrial front while the export automotive business will be under some pressure because this will be the quarter where the chip shortage is going to have the most impact.”
“So, I will be happy to take your questions and try and answer your questions.”
“Secondly this does not include the casting side that business will also ramp up over the next two to three years and we expect that this will also grow at a double digit pace, but more interestingly and exciting for us is our entire e-mobility components and systems business where we are supplying power electronics, control electronics, components, systems and subsystems for EVs all the way from 48 volt to 800 volt.”
“I also had a follow up on the same when we talk about power electronics for which category of products have we seen traction I mean two wheelers, four wheelers EV there where are we already seeing traction in terms of order book win and we have also talked about this aluminum this aluminum Forge cylinders so what are the potential opportunities from these kind of products which you would target?”
“So that is going to be a strong market going forward.”
“Both in CV and PV because of the chip shortage in Q3 there will be a shortage impact in Q3.”
“I think overall Q3 it remains to be seen because there are lot of factors driving this, but overall we will still have a good performance in Q3, but not as good as it would have been if there was no chip shortage so there will be a dip over Q2 and Q3 but not very large.”
Risks & concerns — 7 flagged
Despite the continuing import and logistic cost pressure EBITDA margins came in at a healthy 28.3% which was similar to similar quarter.
— Amit Kalyani
In terms of outlook we expect the standalone business to continue witnessing growth on the domestic front and the export industrial front while the export automotive business will be under some pressure because this will be the quarter where the chip shortage is going to have the most impact.
— Amit Kalyani
Will industrial able to compensate what decline we will see in CV because of the chip shortages or CV relative subdued at least in near term?
— Bhalchandra Shinde
So, I want to understand how do you see the impact of the US infra bill on the demand class construction equipments segments?
— Mukesh
And secondly in the passenger vehicle exports we have seen a QoQ decline so was that primarily because of chip shortage impact or there is something else to it?
— Jinesh Gandhi
So I mean like even if the cylinder orders get completed in Q3 then we should not see negative or a decline in Q4 on the industrial side?
— Sonal Gupta
I mean like how do you see I mean like the inventory situation which our customers now are they given the supply chain disruptions are there running with a higher inventory or will that also lead to some sort of a destocking risk?
— Sonal Gupta
Q&A — 10 exchanges
Q
Firstly I wanted to check on this EV products that we are working on related to e-mobility and also the EV startup if you could talk about what are the products where you think Bharat Forge would be building order book or competencies and how do you see the EV start up investment evolving over the next one or two years?
Amit Kalyani
So let us talk about first components in terms of components we have two categories of components we are focusing on. One is light weighting components which are metallurgical product either forged or cast which were supplying to a variety of OEMs across the world and that business is ramping up quite aggressively. Just in terms of forging we have enough capacity today to take our aluminum forging business from approximately currently 70 million to about 250 million with the capacities on hand and order book on hand. Secondly this does not include the casting side that business will also ramp
Q
Sir about exports we would like to know that as you mentioned on the media also that EV overall industrial prospects are also improving so looking at all the tractions how we see the export growth over next one to two years?
Amit Kalyani
Are you saying quarters or year your voice is breaking I am not able to hear you. Next one to two years not a quarter in next one to two years how we see? Next two years we see very strong export prospects and growth and we have long term contracts in place so I think in good position there. Bharat Forge Limited November 12,2021 Currently our oil and gas is showing a strong traction? Yes oil and gas is strong and getting stronger and I think winter is coming overall because of decarburization the use of gas is going to go up and shale fracking for gas is very competitive option especially for
Q
So you mentioned this forge aluminum cylinders will still be there in third quarter so this quarter we have done 69 crores will it be around similar levels in next quarter as well?
Amit Kalyani
A little bit higher. And domestic industrial how are you seeing the trend and where you see good growth over next say one or two years? So we have created a strategy to grow our domestic industrial business quite aggressively. There are number of sectors where we see opportunity and we believe that we can easily double if not more than double grow our domestic industrial business over the next three years or so. So you are talking about which what would be base of this doubling of revenue like this year revenue you are talking about on that base you can double? More than. Bharat Forge Limited
Q
So, I want to understand how do you see the impact of the US infra bill on the demand class construction equipments segments?
Amit Kalyani
No, the point the US has decided to spent 500 plus billion dollars on infrastructure and this is going to go in areas like roads, bridges, water, rain, electricity and basic infrastructure. So, when you have basic infrastructure this kind of infrastructure spending has a tremendous catering impact throughout the whole ecosystem. So, this will boost truck production, this will boost demand for trucks, demand for construction equipment, demand for high horse power engines, for diesel gensets, for compressors, all kinds of equipment even airports are being now looked at from upgradation because a
Q
First couple of clarification one is the RoDTEP benefit indicated was 11 crores 107 million is that right?
Amit Kalyani
Yes rupees yes. And this was for from 1st Jan till now? January to June. And what it would be for the current quarter? 7 crores. And secondly with respect to CAPEX so how should we look at CAPEX considering that at console level we have already invested about 506 crore on CAPEX so what should be the full year expectation both on standalone and console basis? See as we have told you will be spending about 75 million on our plant in the US that is funded by equity and some amount of debt. We have no CAPEX in India right now. Our CAPEX in India will be under 100 crores and the only CAPEX that wil
Q
My first question was on the e-mobility components that you talked about so you said that you also started to supply in the 48 volt to 80 volt which is for two wheeler and three wheeler this is entirely India right?
Amit Kalyani
This is currently entirely India. And the 48 volts and in that range these components could also be used for hybrid card if I am not wrong and is there an opportunity that you have? Our products is not designed for hybrid cars because we see hybrid as a stepping stone to full electric. We are focusing on full electric solution. Our aluminum forge and car component are going into hybrid and EV, but eventually it will all switch in to EV. And you also talk about in domestic passenger vehicle segment you won some new orders, so what kind of components are these engine components or are these some
Q
Just on the India industrial bid I mean you do on some orders on Kalyani M4 etcetera so have those started kicking in? Bharat Forge Limited November 12,2021
Amit Kalyani
No the deliveries for that will start in Q3 and actually realistic the delivery will happen in Q4. So, that order will be executed over what period? Between Q4 and Q1 of next year because of the COVID situation in April and May we had delay of about two months. So I mean like even if the cylinder orders get completed in Q3 then we should not see negative or a decline in Q4 on the industrial side? No, I mean that the defense business will start kicking in Q4. I mean like how do you see I mean like the inventory situation which our customers now are they given the supply chain disruptions are th
Q
Just couple of clarifications firstly you mentioned Euro 12 to 15 million dollar of power electronic revenue so is this entirely for some are Refu JV or beyond that as well?
Amit Kalyani
It is entirely Refu right now plus what we are shipping from India to Refu 50% of that value I will just ship from here. You said 40%. 30% of that is being ship from here currently. And secondly with respect to overseas operations you indicated double digit margins for full year so when first half was already close to 11% do you expect that will improve from there on or 11% to 12% is where it should stabilize? I think 11 will moderate a little bit because of the chip shortage creating overall reduction in demand, but I think for the full year we will have a double-digit number and then next ye
Q
Amit just a follow up on the different side in addition to the artillery guns is there anything else which you are seeing which is kind of seeing some progress in terms of various changes of the tending of the tendering or the testing I am just trying to understand by when which quarter do you expect some meaningful defense revenues cannons to come in?
Amit Kalyani
Today we have three areas where we have let us say made significant progress. One is on the artillery guns, one is the vehicles and third is on this mounted guns that we have made. So, we have made a light strike vehicle called the Garuda and we have a MGS which is a 15539 mounted on a 4 by 4. So, these are the three areas. Today we have order for the vehicle side for the lighter vehicle and for the heavy vehicle. On the gun side we have one gun in testing which has reached the final stage and on the mounted gun side we are now going for testing. Bharat Forge Limited November 12,2021 By when d
Q
Ladies and gentlemen thank you for your time and interest and as usual if anybody has any other question please feel to reach out to our team we would be happy to take your questions and thank you for your interest and support to our company and have a pleasant healthy and safe weekend. Thank you very much.
Opening remarks
Amit Kalyani
Good afternoon ladies and gentlemen and thank you for joining us at our half yearly analyst call. This is Amit Kalyani and I have with me our finance, sales investor relations and operations team. I take you through some quick highlights and then I will open up for Q&A. Highlight for Quarter 2 was our revenue was little over 1,600 crore or Rs. 16 billion which is almost double of last year same quarter and significantly higher by 17% by the previous quarter. In terms of EBITDA our EBITDA margin at 28.3% and total EBITDA of 455 crores was significantly higher again by about 18% than the last quarter and much higher than the last year. Profit after tax at 311 crores also was about 86% higher in the previous quarter. In terms of our overseas subsidiary we have a half year revenue of 1,663 crores and an EBITDA of 11.3% which is basically a result of the intense cost optimization and product mix improvement and operational improvement that we have made. If you look at our standalone busines