Bharat Forge: Forging worry

Automobile component maker Bharat Forge took a blow on its earnings performance for the fiscal fourth quarter suffering a twin impact of – weak global as well as local demand amid pandemic outbreak.
Baba Kalyani group company reported a consolidated net loss of Rs 68.59 crore for the quarter ended March 2020 (Q4FY20), due to lower sales and one-time exceptional loss. The company had posted a net profit of Rs 324 crore in year-ago quarter.
Consolidated revenue from operations declined 34.8% on-year (YoY) at Rs 1,742 crore against Rs 2,671 crore in the previous year quarter.

On the heels of robust growth over the past 3 years, a routine cyclical correction in commercial vehicle markets in the US and Europe was for forecast for the calendar year (CY) 2020. This was further accentuated with the Covid lockdowns from early March 2020. The company estimates that sales loss was to the tune of Rs 200 crore and impact on the profitability was Rs 90 crore.

The management said FY21 has started on a difficult note with the lockdown impacting demand. Automotive production across commercial & passenger vehicles globally has been severely impacted.
On a standalone basis, Bharat Forge posted a net loss of Rs 73.20 crore against a profit of Rs 299.50 crore. Total revenues declined by 47.2% in Q4FY20 to Rs 881 crore as compared to Rs 1,669 crore in Q4FY19. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins contracted sharply to 16.8% from 29.1% in the year-ago quarter.

Exceptional item of Rs 94 crore consists of Rs 89 crore towards impairment of investments in Tevva Motors & Rs 4.9 million towards voluntary retirement scheme (VRS).

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