InvestorQ : Why has Bharat Forge stock fallen so sharply on 29 June? Is it due to the Mar-20 quarterly results?
manisha Kolvenkar made post

Why has Bharat Forge stock fallen so sharply on 29 June? Is it due to the Mar-20 quarterly results?

Answer
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Mahima Roy answered.
3 months ago


Bharat Forge reported net loss of Rs.68.59 crore for the Mar-20 quarter. This was largely on the back of lower sales as well as a one-time exceptional loss. In the Mar-19 quarter, Bharat Forge had posted net profit of Rs.324 crore. Even revenues from operations fell by 34.8% to Rs.1742 crore due to extremely weak business sentiments in local and global markets.

The weak performance of Bharat Forge in the Mar-20 quarter has been driven by the tepid commercial vehicles market in the US and Europe. The COVID lockdown only exacerbated the problem for Bharat Forge. According to the company management, the sales loss due to COVID-19 was to the extent of Rs.200 crore while impact on profitability was Rs.90 crore.

To begin with, automotive production across commercial and passenger vehicles globally was severely impacted. For the full year, the EBITDA margins of Bharat Forge contracted from 29.1% to 16.8%. The quarter also took a hit of Rs.89 crore towards impairment of investments in Tevva Motors.

The impact on the stock price was almost immediate as the stock cracked by over 10% on 29 June. The stock has already corrected very sharply over the last one year and the weak numbers have only added to their problems.