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Market Response to Bharat Forge’s Growth Outlook Revision: Shares Plummet Amidst Management Projections

12th February, 2024| By Business Desk
Bharat Forge Gate
Bharat Forge Gate | Credit: Wikimedia Commons
  • Bharat Forge’s shares plunged over 10% on the NSE following management’s revision of growth projections for Q4 and FY25.
  • Chairman Baba Kalyani anticipates a moderation in growth momentum across domestic and export markets.
  • Despite the challenging outlook, the company reported robust performance in Q4, with sales growing by 15.9% and EBITDA increasing by 30.9%.
  • Bharat Forge secured new business worth Rs 550 Crores across various sectors, including automotive, defense, and aerospace.
  • The company remains focused on achieving profitability in its overseas ventures, with efforts to optimize operations in the aluminum and steel divisions within the next 12 to 18 months.

Bharat Forge, a prominent entity in the industrial landscape, witnessed a substantial decline in its shares, plummeting over 10% to an intra-day low of Rs 1,131 on the National Stock Exchange (NSE) at 2:43 pm. This stark depreciation in share value ensued following the management’s revision of growth projections for both the fourth quarter (Q4) and the entirety of the fiscal year 2024-2025 (FY25).

Baba Kalyani, the esteemed Chairman and Managing Director of Bharat Forge, conveyed, “As we look ahead into Q4 and further into FY25, we anticipate a moderation in the growth trajectory across domestic and export markets spanning various industries. Our strategic objective remains steadfast in surpassing market expectations, propelled by our diversified business portfolio.”

The principal factor attributed to the notable downturn in share prices is the anticipation of a deceleration in growth momentum, affecting both domestic and international market segments.

Despite the prevailing challenging economic landscape, the management reported a commendable performance for the quarter, with sales witnessing a robust growth of 15.9%, totaling Rs 2,263 Crores, and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) registering an impressive surge of 30.9%, amounting to Rs 645 Crores. Noteworthy is the expansion of EBITDA margins to 28.5%, marking a substantial increase of 330 basis points (bps), credited to a favorable product mix and a concerted effort towards cost optimization initiatives.

Notably, during the quarter under review, Bharat Forge successfully secured new business ventures amounting to Rs 550 Crores, spanning diverse sectors such as automotive, industrial, defense, aerospace, and castings encompassing both ferrous and aluminum domains. Encouragingly, the operational metrics within the Aluminum segment in Europe have showcased improvement, with a similar positive trend anticipated in the United States facility in the near future.

The company remains steadfast in its commitment to nurturing a sustainable pathway to profitability for its international ventures. Endeavors such as achieving profitability within the aluminum segment and implementing product and manufacturing optimizations within the steel division are anticipated to materialize within the forthcoming 12 to 18 months, underpinning the strategic focus of the organization.