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Systematix Research Report
Bharat Forge Ltd.'s Q2 FY23 operating performance was 4% below consensus but in-line with our estimate as strong revenue growth was offset by a sequential fall in Ebitda margin. Adjusted Ebitda margin came in at 25.4% (down 80 basis points QoQ) as gross margin saw a sharp contraction.
Management highlighted that the demand across domestic and export segments remains stable. Bharat Forge has won Rs 9 billion new orders during the quarter across domestic and export segments.
The acquisition of JS Auto (in industrial segment) coupled with benefits of cost rationalisation should drive profitability over the medium term.
Overseas business was impacted by macro headwinds (lower demand, high energy costs) and supply chain constraints. The management expects operations to stabilise over the next six-nine months.
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