Bharat Forge (500493) Q4 06/07 earnings summary

Executive summary

• FY07 consolidated revenue reached Rs.42,752.13 million, up 38.6% YoY; PBDIT rose 26.2% to Rs.7,432.72 million and PAT after minority interest rose 16% to Rs.2,905.88 million.

• Revenue crossed USD 1 billion a year ahead of target; EPS was Rs.13.01 on Rs.2 face-value shares.

• Growth priorities: integrate global operations, ramp new capacity, deepen OEM partnerships, grow China operations and build non-automotive forgings to diversify revenue.

Financial highlights

• Consolidated total revenue was Rs.42,752.13 million vs Rs.30,850.13 million in FY06; PBDIT was Rs.7,432.72 million vs Rs.5,889.06 million.

• Consolidated PAT after minority interest reached Rs.2,905.88 million vs Rs.2,505.42 million; EPS was Rs.13.01 vs Rs.11.51 basic.

• Stand-alone total revenue rose 19.3% to Rs.19,452.97 million; PBDIT increased 23.9% to Rs.5,484.72 million and PAT rose 16.4% to Rs.2,409.53 million.

• Stand-alone exports were Rs.7,513 million, up 15% YoY; consolidated revenues outside India reached Rs.30,651 million, up 46.1%.

Outlook and guidance

• Mundhwa capacity ramp-up was expected to accelerate in FY08; incremental capacities were anticipated to be fully utilized within 12–18 months of stabilizing.

• Baramati and Mundhwa non-auto projects had estimated investment of Rs.3.5 billion; phased production was expected over 12–18 months from March 2008, adding ~100,000 MTPA forging capacity.

• Non-auto revenue contribution was targeted to rise from 17% to 25% in 2–3 years and toward 40% within five years.

• China component demand was expected to recover during FY08 as excess inventory corrected; new capacity was expected to take total China capacity to ~135,000 MTPA by FY09.

• European programs and Indian demand supported growth expectations, while India was not expected to repeat the prior year's auto-market growth pace.