Bharat Forge Q2 loss at Rs 1.32 crore
Shares of Bharat Forge eased 0.67% to Rs 496.40 apiece on NSE, following the muted September quarter earnings release, and cautious commentary by the management — especially on the exports front.
The world’s largest forging company on Wednesday, after market hours, reported a consolidated net loss of Rs 1.32 crore in the second quarter ended September 30 hit by the coronavirus pandemic induced disruptions. The company had posted a consolidated net profit of Rs 205.49 crore in the same quarter last fiscal.
Consolidated revenue from operations during the period under review stood at Rs 1,376.09 crore as against Rs 2,155.20 crore in the year-ago period.
Lockdown impacted overseas unit operations in Europe and North America during April-June period severely. Despite governmental assistance, they recorded an EBITDA loss of Rs 334 million.
On a positive note, the domestic automotive industry started showing some signs of recovery from the months of July and August.
As the economy started opening up again in a phased manner and infrastructure projects got on track, fleet utilisation improved sequentially resulting in firming up of freight rates.
As a result, every segment of the commercial vehicle (CV) industry witnessed a rise in demand, but demand was more robust on LCV and ICV as compared to the M&HCV segment. The M&HCV production was down 41% in Q2 FY21 compared to the same period last year.
Demand in both, the domestic and overseas markets improved gradually over the course of the quarter on the back of increased freight volumes, higher freight rates and some pent-up replacement cycle demand. It is expected to remain stable at the present range in the near term with buyer confidence increasing as the economy recovers and generates ample freight.
Looking forward, the outlook for domestic market is positive but is subject to continued momentum on the investment in infrastructure.
On the export front, there are clear signs of demand improvement, especially in the commercial vehicle segment, but the second wave of Covid-19 cases in Europe and North America and its potential impact on demand is something to keep track of.
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