Bharat Forge is a preferred Technology & Engineering driven development partner and global leader in metal forming and it serves several sectors including Automotive, Railways, Aerospace, Marine, Oil & Gas, Power, E-Mobility, Construction and Mining. It is the world's largest forging company and amongst one of the best aerospace forging companies and automotive forging company. It is also a leading supplier of various components for the aviation sector.

Considering various business segment wise Bharat Forge is a leading railway engine parts manufacturer of wheel sets, truck frames and rail components in India its manufacturing portfolio includes Engine components such as crankshafts, connecting rods, pistons, deck ends, retainer cylinder heads; Turbochargers like Machined Compressor Impeller, Turbine Wheel Impeller Balance Assembly and Turbine Disc Bucket Assembly; various bogie components and Power Electronics. In Automotive segment company is the largest exporter of Auto Components from India and one of the leading Chassis Components manufacturers in the world. In POWER segment company manufactures critical components for thermal, wind, hydro and nuclear applications. In Oil and Gas segment, company is a leading gas forgings supplier with a wide spread supply chain capability of handling multiple primary and secondary processes including Open Die Press, Ring Rolling, Close Die Hammer, Finish Machining and Cladding which helps it to deliver turnkey services. In Marine Segment company supplies various products to global ship builders which includes products like including key products like crankshafts, connecting rods and propeller shafts. It is one of the most reliable connecting rod manufacturers in India and rank amongst the best crankshaft manufacturers in India. Company also manufactures other marine products for the shafts - propeller, marine motor and stem tube and products for the rudder - stock, trunk and pintel. In Aerospace segment company is a leading supplier of various components - airframe, structural and engine parts for the aviation sector. Also known to be one of the best aircraft compressor manufacturers in India. Company’s E-Mobility portfolio includes a whole span of solutions for the 2W, 3W, 4W, Bus and Truck electrification, ranging from providing selected sub-systems to complete electric powertrain kits under it’s wholly owned subsidiary Kalyani Powertrains Limited. Company’s casting arm JS Auto Cast is amongst the most reliable castings suppliers to leading OEMs with a capacity for producing 120000 LMT of ductile iron (DI) castings annually catering to the foundry processing offerings for applications in various industries such as Wind Energy, Hydraulics, Agricultural, Off-Highway, Automotive, Oil and Gas sectors.

It has 15 manufacturing plants spread across 5 countries which includes India, Germany, Sweden, France, and North America. It has the largest repository of metallurgical know-how, design & engineering expertise, and manufacturing prowess in the region backed by more than 50 years of experience in manufacturing a wide range of high performance, critical and safety components. It has 30+ Years of Exporting experience with 750,126 TPA Global Forging Capacity through which it caters 60+ Global Customers and 40+ Domestic Customers.

Fundamentals (FY23-24):

Financial Results:

Company’s Net Sales was at Rs 3,774.19 crore in September 2023 up by 22.68%, Quarterly Net Profit was at Rs. 227.23 crore in September 2023 up by 55.72% and EBITDA stands at Rs. 673.91 crore in September 2023 up by 41.02% as compared to September 2022. Company’s EPS has increased to Rs. 4.88 in September 2023 from Rs. 3.13 in September 2022.

Key Updates:

1. Bharat Forge recently announced a partnership with the Tamil Nadu government to invest up to Rs 1,000 crore over the next five years for expanding its manufacturing operations in the state.
2. Kalyani Rafael Advanced Systems Private Limited, a joint venture company between Kalyani Strategic Systems Limited (a wholly owned Defence subsidiary of Bharat Forge Limited) and Rafael Advanced Systems Limited of Israel, has bagged an order amounting to Rs. 2875.1 million inclusive of taxes from the Indian Ministry of Defence for the supply of Missile Systems.
3. Kalyani Strategic Systems Limited, a wholly-owned Defence subsidiary of Bharat Forge, has bagged two export orders aggregating to EURO 93.87 million (~Rs 850 Crores) from friendly countries for supply of components and Armored vehicle chassis to be executed over a 18 months’ time frame.
4. Recently, Hindustan Aeronautics Limited (HAL), Foundry & Forge Division, Saarloha Advanced Materials Pvt Ltd (Saarloha) & Bharat Forge Limited (BFL) signed MOU for Collaboration in Development and Production of Aerospace grade steel alloys.
5. Bharat Forge Ltd & global aerospace and technology company, Paramount Group signed a Memorandum of Understanding (MoU) for the development and production of Composite Rotor Blades, Mission Systems and Stores Management systems for Medium Lift Helicopters.
6. Rolls-Royce Marine North America Inc and Kalyani Strategic Service Limited (KSSL), a 100% subsidiary of Bharat Forge, have signed a MoU to explore the opportunity for KSSL to become an in-country provider for propulsor sales within the Indian market.
7. J S Auto Cast Foundry India Private Limited (“JS Auto”), its step-down subsidiary has entered into Business Transfer Agreement with Indo Shell Mould Limited (“ISML”) for acquiring their SEZ Unit in SIPCOT, Erode.
8. Saarloha Advanced Materials Private Limited (Saarloha), a Kalyani group company recently launched first of its kind in India, green steel under the brand “KALYANI FeRRESTA”. KALYANI FeRRESTA steel products are manufactured in an Electric Arc Furnace using electricity from 100% of renewable energy sources and more than 70% recycled scrap material with zero GHG footprint. KALYANI FeRRESTA PLUS has Net Zero GHG emissions per ton of Crude steel whereas KALYANI FeRRESTA has very low GHG emission of <0.19 tCO2e per MT of Crude Steel.
9. Kalyani Rafael Advanced Systems Pvt Ltd (KRAS) recently rolled out the 100th Medium Range Surface to Air Missile Kit for delivery to the Indian Armed Forces. The kit is part of the MRSAM Air Defence Missile jointly developed by Rafael Advanced Defense Systems Ltd & DRDO and manufactured in collaboration with Indian industry comprising of both private and public sector players including MSMEs.
10. Kalyani Strategic Systems Limited, a wholly owned subsidiary of the Company, recently bagged another export order for a 155mm Artillery Gun platform to be executed over a 3-year timeframe at the total value of the order is USD 155.50 Mn.
11. Company also signed a MOU with General Atomics, US, a global leader in the research, design, and manufacture of a diverse portfolio of electromagnetic and advanced power and energy technologies. Under the terms of the MOU, Bharat Forge and General Atomics’ Electromagnetic Systems Group (GA-EMS) will collaborate for Lithium-Ion Battery System for naval platforms/submarines to address the requirements of Indian Navy.
12. Bharat Forge Limited has recently dispatched 16 world-class and Made-In India Kalyani M4 vehicles to the Indian Army for United Nations Peacekeeping deployment. The Kalyani M4 is a state-of-the-art Armored Personnel Carrier that provides unprecedented levels of protection to the occupants against high Kinetic Energy threats including severe mine blasts and grenades.
13. Kalyani Powertrain Limited and Harbinger Motors Inc. Announce Joint Venture named Electro Forge, to Develop Electrified Drivetrains for the Commercial Trucking Industry at Kalyani Powertrain Limited’s Pune, India facility with expansion anticipated worldwide.
14. Year ago in East Tech 2022, company showcased a glimpse of Artillery Gun Systems, Protected Vehicles, Armored Vehicles, Ammunition, Missiles and Air Defence Solutions, Small Arms, and Defence Electronics developed by the Kalyani Group.
15. BF Infrastructure Ltd., a wholly-owned subsidiary of Bharat Forge Limited and Talgo India Pvt Ltd., a wholly-owned subsidiary of Patents Talgo S.L. have collaborated together to set-up a joint venture which will engage into manufacturing high speed passenger trains. The alliance will also address in future large business opportunities in the Indian Railways sector and tap the upcoming domestic requirements in the field.
16. Kalyani Strategic Systems Limited (KSSL), the defence arm of Kalyani Group had recently unveiled the unique drone BHARAT 150, a multi-payload, variable mission drone indigenously developed by the group. The X-8 configuration drone is already under testing by the Indian Army in high altitude areas in Leh-Ladakh and performed 8.5 KM with 20 kg payload.
17. Company has also successfully started commercial production of new Electric 2-wheeler at Chakan which has capacity of 60,000 vehicles per annum, expandable to 100,000 vehicles.

In last 3 Years the stock gave a return of 103.63% as compared to the rise of Sensex and Nifty in the same period.

Company has a well-diversified business across various industries and catering to various OEMs across the globe. Its foray into Aerospace, Defense and E-mobility business through acquisitions and JVs may work as a key driver for its growth in upcoming years. Considering company’s world-wide presence, proven financial track record, foray into futuristic business segments, good orderbook positions due to orders from Private as well as PSU entities and backed by GOI’s focus on strengthening India’s position in world economy, investors may invest in this company for long term period.

HET ZAVERI

info@smartinvestment.in

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