Any current/future new fundraising through debt or equity?

Bharat Forge Limited is planning a fundraising of up to ₹2,000 crores. The fundraise is focused solely on growth-oriented deployment within India. It will support expansion of manufacturing footprint for both global and Indian opportunities. The fundraising will be a combination of both Greenfield (organic) and inorganic (acquisition) growth. This is the first equity raise since 2010-11. The company is evaluating each investment decision on its merits but intends to focus growth and expansion primarily in India.

Any current/future capex/capital investment/strategic investment?

Bharat Forge plans a total CAPEX of about ₹1,000 crores spread over the current and next financial year, including subsidiaries. The CAPEX will be for growth of manufacturing footprint in India, targeting both global and Indian opportunities. It will involve a combination of Greenfield (organic expansion) and inorganic acquisitions. The focus remains on allied metallurgical products and value-additions related to existing business areas, aimed at creating more customer traction. The US aluminum operations have a phase two CAPEX ongoing, which is a 28 to 30 months project and will conti

Future growth expectations in sales/revenue/volumes?

Defense business expected to grow over 50% this year, with a robust and expanding order pipeline. Aerospace segment forecasted to grow 15-20% this year with strong double-digit growth next year. Industrial business anticipated to continue growing and improving. Exports show volatility but expected to be steady with ongoing efforts to increase market share. Oil and gas export business showing positive momentum and heading towards growth. European operations expect stable to slightly positive top-line due to pricing actions. US volume declines expected to be short-term; volumes likely to recover

Future growth expectations in earnings/operating earnings/profits/EPS?

Bharat Forge expects a stable to positive overall year with growth opportunities across automotive, defense, and industrial segments. Defense business is projected to achieve over 50% growth this year with a robust order pipeline. Overseas subsidiaries, especially Europe, anticipate substantial improvement in EBITDA and reduction in losses by FY25-end and stronger performance in FY26. The aerospace segment expects 15-20% growth this year, followed by strong double-digit growth next year. Oil and gas business is showing positive momentum, supporting export growth. JSA Auto division is on track

Current/ Expected Orderbook/ Pending Orders?

Current defense order book is around Rs. 5,400 crores. Execution of defense orders is running faster than expected; previously anticipated to take 3-4 years. Significant new orders have been won across vehicles, artillery, and MRO items. ATAGS artillery order (about 307 guns) valued at roughly Rs. 4,000 to 4,500 crores is close to finalization. Orders for guns and artillery across various categories represent a sizable opportunity, both in India and globally. The company has a robust pipeline with a mix of long-term, new, and existing orders generating revenue. Order intake corresponds to deli

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Bharat Forge LtdQ2 FY24Auto Components

Bharat Forge Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹2,145P/E: 77.5Market Cap: ₹91.5K CrSector: Auto Components

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Defense business expected to grow over 50% this year, with a robust and expanding order pipeline.
→Aerospace segment forecasted to grow 15-20% this year with strong double-digit growth next year.
→Industrial business anticipated to continue growing and improving.
→Exports show volatility but expected to be steady with ongoing efforts to increase market share.
→Oil and gas export business showing positive momentum and heading towards growth.
→European operations expect stable to slightly positive top-line due to pricing actions.
→US volume declines expected to be short-term; volumes likely to recover by Q4.
→Domestic CV market flat (+/-5%) with heavier order inflows expected in Q3 and Q4.
→Overall outlook is stable to positive across automotive, defense, and industrial segments with new growth trajectory.

Margin guidance

Category 3

→Bharat Forge expects a stable to positive overall year with growth opportunities across automotive, defense, and industrial segments.
→Defense business is projected to achieve over 50% growth this year with a robust order pipeline.
→Overseas subsidiaries, especially Europe, anticipate substantial improvement in EBITDA and reduction in losses by FY25-end and stronger performance in FY26.
→The aerospace segment expects 15-20% growth this year, followed by strong double-digit growth next year.
→Oil and gas business is showing positive momentum, supporting export growth.
→JSA Auto division is on track to cross Rs. 1000 crores sales with a strong EBITDA growth and profitability increase.
→Pricing actions and operational improvements in overseas businesses are expected to improve margins progressively through FY25.
→Overall, management is optimistic about margin improvements, operational performance, and sustainable growth across segments, supporting better earnings and EPS in the near to medium term.

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Fundraise plans

Yes

→Bharat Forge Limited is planning a fundraising of up to ₹2,000 crores.
→The fundraise is focused solely on growth-oriented deployment within India.
→It will support expansion of manufacturing footprint for both global and Indian opportunities.
→The fundraising will be a combination of both Greenfield (organic) and inorganic (acquisition) growth.
→This is the first equity raise since 2010-11.
→The company is evaluating each investment decision on its merits but intends to focus growth and expansion primarily in India.

Order book

Yes

→Current defense order book is around Rs. 5,400 crores.
→Execution of defense orders is running faster than expected; previously anticipated to take 3-4 years.
→Significant new orders have been won across vehicles, artillery, and MRO items.
→ATAGS artillery order (about 307 guns) valued at roughly Rs. 4,000 to 4,500 crores is close to finalization.
→Orders for guns and artillery across various categories represent a sizable opportunity, both in India and globally.
→The company has a robust pipeline with a mix of long-term, new, and existing orders generating revenue.
→Order intake corresponds to deliveries 18 to 24 months ahead, indicating a healthy order pipeline for this year and next.
→No immediate impact on business expected from this order intake as it's well in advance.

Capex plans

Yes

→Bharat Forge plans a total CAPEX of about ₹1,000 crores spread over the current and next financial year, including subsidiaries.
→The CAPEX will be for growth of manufacturing footprint in India, targeting both global and Indian opportunities.
→It will involve a combination of Greenfield (organic expansion) and inorganic acquisitions.
→The focus remains on allied metallurgical products and value-additions related to existing business areas, aimed at creating more customer traction.
→The US aluminum operations have a phase two CAPEX ongoing, which is a 28 to 30 months project and will continue despite recent weakness.
→The new plant for the defense wholly owned subsidiary KSSL is expected to commence operations around October-November 2024.

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