Bharat Forge Q1 Net Loss: Shares Drop 9% on Rs 90 Cr Loss

Bharat Forge Ltd. shares plummeted by 9% following the announcement of a net loss of Rs 90 crore for the June quarter. This starkly contrasts with a net profit of Rs 284 crore reported in the same period last year.

The company attributed this loss primarily to an exceptional loss of Rs 358 crore. This figure is largely linked to its German subsidiary, Bharat Forge CDP GmbH, which faced restructuring expenses and provisions due to prevailing market challenges and cost disadvantages.

Q1 Financial Overview

• Net Loss: Rs 90 crore
• Prior Year Profit: Rs 284 crore
• Exceptional Loss: Rs 358 crore
• Revenue Increase: 18.7% year-on-year to Rs 4,640 crore
• EBITDA Growth: 5.5% to Rs 710 crore
• EBITDA Margin Narrowed: From 17.2% to 15.3%

While revenue aligned with market estimates, the modest 5.5% EBITDA increase missed the projected Rs 809 crore. The EBITDA margin also compressed to 15.3% from 17.2% year-over-year.

Operational Headwinds and Margin Impact

Amit Kalyani, vice chairman and joint managing director, noted that high energy prices significantly impacted the company’s margins. He stated this factor alone shaved 130 basis points off the margins, alongside production issues in the United States.

Kalyani highlighted that without the surge in energy costs, the company’s margins would have been substantially higher, potentially reaching 28%. This indicates the significant external pressures on profitability during the quarter.

Strategic Outlook and Expansion Plans

Bharat Forge has revised its guidance downwards, anticipating a slowdown in demand. Despite this, the company identifies considerable opportunities within high-value sectors such as defense and aerospace.

To support its growth initiatives, Bharat Forge plans to raise Rs 2,500 crore over the next three years to fund capacity expansion. The company projects its manufacturing business margins to settle between 22-23% by fiscal year 2027.