New Delhi: Leading Indian company, Bharat Forge, involved in forging, automotive, energy, construction and mining, railways, marine, aerospace and defence industries, has made some aggressive bets for the armed forces. A senior company official revealed that while it is already in the midst of executing orders worth Rs 3,000 crore for multiple product lines from the defence sector, another Rs 2,000 crore contract for artillery guns for the Indian armed forces is on the anvil.
“I think the revenue run rate will keep growing as quarters roll on with some gaps in between one order to the other because there is a process that takes place. Overall, we are very confident of the growth in the defence vertical. Our indigenous orders will also materialise for the artillery guns in December. That will add to the order book. So things are looking good on our defence business,” Baba Kalyani, CMD, said.
When asked regarding orders for artillery guns, he maintained that the order book would be split between companies and add Rs 2,000 crore to the business. He also revealed that there is a major transition programme that is underway wherein the company is moving from subsystems and components to end products.
“As you are aware, we are in a major transformation moving from components to products. Defence is one of those transformation phases,” added Kalyani. He also indicated that there are other transformation phases that will be coming in as quarters move forward. “We are very optimistic and see strong growth in the company. There is a major shift in the kind of products we make. We will continue to make conventional products that we were making with a much higher market share worldwide,” noted Kalyani.
While the company is already supplying armoured vehicles to the domestic defence forces, it is now expanding its frontiers abroad. It will start churning out artillery guns in December/January.
“ We will probably get more orders in the export markets than in the domestic market. A tremendous amount of demand is coming from many different countries,” affirmed Kalyani.
Bharat Forge Ltd witnessed a robust 52 percent increase in its consolidated net profit for the September quarter, driven by contributions from all businesses. While consolidated net profit for the quarter stood at Rs 2148.65 crore against Rs 1415.56 crore a year ago, revenue soared 22.7 percent to Rs 3,774.19 crore, with a 21 percent increase in both export and domestic revenue. In Q2FY24, PV exports surged by 39 percent YoY, and domestic revenue grew 1.5X due to the defence business.
Bharat Forge’s EBITDA margin reached 27.4 percent, a 330 bps YoY increase. The company claimed that superior operational performance was driven by an improved product mix and higher capacity utilisation. The Pune-based firm also revealed that a debt reduction of Rs 307 crore brought ROCE closer to 20 percent. At a consolidated level, it has reduced its debt from Rs 2,445 crore in the last quarter to Rs 2,175 crore in the current one. It is on course to prune its debt further by Rs 500 crore in the next six months.
