During Thursday’s trading session, the shares of India’s largest manufacturer and exporter of auto components surged by 0.3 percent to Rs. 1,479.4 on BSE, after entering into a definitive agreement to acquire AAM India Manufacturing Corporation Private Limited for Rs. 544.53 crores.
With a market cap of Rs. 68,496 crores, the shares of Bharat Forge Limited opened at Rs. 1,474.1, compared to its previous closing price of Rs. 1,475.05.
What’s the news:
Bharat Forge Limited entered into a definitive agreement to acquire AAM India Manufacturing Corporation Private Limited (AAMIMCPL) for an enterprise value of Rs. 544.53 crores, pending closing adjustments.
According to the latest regulatory filings with the BSE, with this transaction, the company will acquire the commercial vehicle axle business of AAMIMCPL in Pune and Chennai, as well as the Pune Engineering and Development Center.
The transaction is subject to approval from the Competition Commission of India (CCI) and will only be completed once the CCI grants its approval and all other standard closing conditions are met.
About the Target Entity:
AAMIMCPL is a leading manufacturer of axles for light, medium and heavy-duty commercial trucks and passenger buses in India.
Established in 2008, AAM India Manufacturing Corporation Private Limited is a subsidiary of American Axle & Manufacturing Holdings, Inc.
Previous News:
On 2nd October, Kalyani Strategic Systems Ltd, a 100 percent subsidiary of Bharat Forge Limited, announced plans to enter into a multi-party agreement with leading United States defence companies, AM General and Mandus Group LLC, to explore the co-development and co-production of next-generation artillery gun platforms.
This collaboration was targeted to address the requirement of modern armies of the world in an evolving combat scenario equipping them with compact, robust, lightweight, ruggedized, mobile, all-weather, all-terrain 105mm and 155mm next-generation artillery gun platforms.
Financials:
The company experienced a significant growth in its revenue from operations, showing a year-on-year increase of around 6 percent from Rs. 3,877 crores in Q1 FY24 to Rs. 4,106 crores in Q1 FY25.
However, its net profit decreased during the same period from Rs. 214 crores to Rs. 175 crores, representing a decline of 18.2 percent YoY.
A key driver of the company’s strong performance was the fulfilment of defence export orders won by KSSL, along with a continued robust ramp-up of export business across all segments except Oil & Gas.
The balance sheet remains robust, with cash (net of long-term liabilities) of Rs 815 crores and significant improvements in all key parameters. At a consolidated level, the topline grew by 21.5 percent to Rs 15,682 crores, while EBITDA increased by 44.4 percent to Rs. 2,566 crores.
Order Book:
In FY24, the Indian operations secured new orders worth Rs. 1,350 crores across automotive and industrial applications, including a mix of existing and new customers across both traditional and new products.
Additionally, the company obtained new orders totalling Rs 4,494 crores in artillery systems, armoured vehicles, and consumables. As of 31st March 2024, the executable order book stands at Rs 5,192 crores.
Management Guidance:
At a consolidated level, Bharat Forge anticipates FY25 to be a year of growth driven by the defence business, industrial casting business, and ongoing improvements in capacity utilisation of overseas operations.
The turnaround of the overseas business, combined with margin improvements in other business verticals, is expected to result in strong growth in profitability for FY25.
Stock Performance
The stock has delivered positive returns of nearly 31.3 percent in one year, as well as around 24 percent returns in the last six months. So far in 2024, the shares of Bharat Forge have given about 18 percent of positive returns.
About the company:
Bharat Forge Limited is engaged in the business of manufacturing and selling of forged and machined components including aluminum castings for the auto and industrial sectors as well as assembled products for the defence industry.
Written by Shivani Singh
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