Friday, January 19, 2007

Bharat forge results tommorow looks positive

Bharat forge looks positive on reults as well as for long term(2-3 yrs)
It provides minimum downside.........but huge upside potential hence minimises risk with a good return.
The following features are taken into account..

Bharat Forge, the largest forging company in Asia and the second largest in the world is to declare its Q3FY07 result on 20th January. According to the CNBC-TV18 estimates, the company is expected to post some good numbers in the third quarter. Its net profit (standalone) may go up by 28% YoY at Rs 68 crore against Rs 53 crore during the same quarter last year. The company is expected to post net sales (standalone) up 22% at Rs 487 crore versus Rs 399 crore.

Q3 key points
Expecting improvement in margins on back of higher utility rate of expanded capacities
Increase share of machined components also to add to margins (better product mix) Company expecting cap utility to go up to 75% by end-FY07
Positive surprises possible on account of strong growth in domestic CV market
Domestic sales enjoy higher margins as compared to exports

Key Developments
On the verge of signing for new major contracts of US$50 mn p.a. each (Co. expects the contracts to get signed by end FY07)
Export revenue growth may dip in FY08 w/ slowdown in US heavy truck market next yr
Targeting new avenues in the Non automotive component business (Energy, Hydro carbon, Aerospace, Marine, Mining & metals. Planned investment outlay of Rs 350 cr over next 2 yrs. Capacities to get commissioned by mid to end FY08) Targeting revenues of Rs 1000 cr by 2011 from non-automotive segment

Capacities globally - close to 600,000 MT- India: 240,000 MT working at about 66% cap util- US: 50,000 MT- Germany: 100,000 MT- China: 100,000 MT - working at very low cap util- Sweden and Scotland: 100,000 MT- Chinese JV, FAW Bharat Forge struggling to show positive performance

Signed a MoU with Govt of Mah to jointly develop a SEZ
SEZ expected to attract investments of about Rs 25000 cr

Kalyani Group to hold upto 74% of the equity capital

Looking towards sez plans and entry into china with huge aquisitions and cosolidation of capacities by this yr. It is one of the major growth stories and hence an entry at dips can be taken. current levels look ok for long term but looks a liitle stretched for short term.And imagine its sales by 2011 when non automotive revenues will touch 1000cr($250mn) and auto revenues will obiously zoom.

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