Stocks
Near-term headwinds for Bharat Forge
North American Free Trade Agreement (NAFTA) Class 8 Trucks recorded a whopping 40% year-on-year (y-o-y) decline in April 2016 to around 14,000 units, according to brokerage firm Edelweiss. The decline is also steep at 15% on a quarter-on-quarter (q-o-q) basis. Such trucks are critical for Bharat Forge as it derives 20% of its revenue from North America trucks segment. In November 2014, the NAFTA Class 8 trucks reported an extraordinary rise of nearly 100% y-o-y (Source: Bloomberg). Since then, there has been a decline in the growth rates. The trucks have reported negative growth on a y-o-y basis since March 2015. According to brokerage firm Edelweiss, commentaries Pacific Car and Foundry Company, Daimler and Volvo indicate a 20-25% decline in NAFTA class 8 market from 15% earlier. 
 
While Bharat Forge will get hit in the North America, it has established its presence in European market through a number of acquisitions; and Europe has shown positive signs by reporting 30% year to date (YTD) growth in heavy duty market, which is in contrast to the NAFTA Class 8 Trucks. Exports accounted for around 68% of Bharat Forge's revenues in FY14-15 based on consolidated numbers. Commercial vehicles are a significant contributor to export sales. They accounted for 59% of its export sales in FY14-15. 
 
 
The company has entered the US passenger vehicles market in order to open new revenue stream and diversify risk. Its plans include expanding into global aerospace segment. Recently, aircraft manufacturer Boeing, has awarded a contract to the company to procure titanium forgings for its Boeing 777 aircraft. Bharat Forge has been already supplying titanium flap-track forgings for the Boeing 737. The company will also supply forgings for the 737 MAX, scheduled to enter service in 2017. It has significant plans for investments into the defence space too. 
Bharat Forge is one of the largest commercial forgings company in the world. Its return on equity (RoE) stands at around 21% based on trailing 12 months earnings on a standalone basis. It trades at around 25 times its trailing 12 months standalone earnings. The debt equity ratio for as on 31 March 2015 stood at 0.74 based on consolidated results. 
 
The stock has had an extraordinary run for two years since August 2013, when it touched a low of Rs185. From then, it touched a high of Rs1,288 in August 2015, delivering stupendous returns of nearly 600%. The stock has been under pressure in the last eight months. During this period, it has declined by 40% from a price of Rs1,288 in mid-August to Rs780 currently. The company has informed the exchanges that that a meeting of the Board of Directors will be held on 17 May 2016, to consider the audited financial results of the Company for the quarter and year ended on March 31, 2016 and to consider recommendation of final dividend.
 
 

User

Mrugank Paranjape is the new MD & CEO of MCX
Mrugank Paranjape is the new Managing Director and Chief Executive Officer (MD & CEO) of Multi Commodity Exchange of India (MCX). Paranjape’s appointment has been approved by Securities and Exchange Board of India (SEBI), for a period of three years, according to a release from MCX.
 
Paranjape is an alumnus of IIT Mumbai (Electrical Engineering), and holds a PGDM (Specialization in Information Systems) from IIM Ahmedabad. He brings with him over 25 years of experience in diverse roles across various geographies and functions. He has experience in Custodial Services, Offshoring Strategy, Operations, Risk Management, Asset Management, Transaction Banking, Business Development, Client Acquisition, Global Equity Services and Product & Client Management etc.
 
During the last decade he has been with Deutsche Bank in India and abroad. He has also held senior positions with ICICI Prudential AMC, Reliance Logistics, IndiaInfoline.com, W.I. Carr Securities Private Ltd, ING Baring Securities (India) Pvt Ltd, IIT Invest Trust Ltd, and Citibank.
 
Commenting on his appointment, Mrugank Paranjape said, "I am delighted to join MCX and take up the new challenge in the given interesting times. MCX has built a niche for itself in a considerable short span of time and it is indeed a privilege to lead the organisation.”
 

User

Shaily Engineering Plastics: Leap of Faith
There is a lot of excitement among a section of market-players, looking for the next...
Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)