Table of Contents

Rpt. 67579844 BHARAT FORGE LTD 2 - 30

05-Jul-2019 GLOBALDATA
- GLOBALDATA

Rpt. 63006629 BHARAT FORGE LTD 31 - 55

28-Jun-2019 MARKETLINE - COMPANY RESEARCH
- DATAMONITOR INDEPENDENT RESEARCH

Rpt. 67409528 BHARAT FORGE LTD 56 - 65

29-May-2019 ICICI DIRECT
- KANODIA, SHASHANK, ET AL

Rpt. 67407188 BHARAT FORGE LTD 66 - 73

29-May-2019 KARVY STOCK BROKING LTD.
- BENDRE, MAHESH, ET AL

These reports were compiled using a product of Thomson Reuters [Link]

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Bharat Forge Ltd (BHARATFORG)
Financial Analysis Review

Report Code: GDIGM27790FA

Published: July 2019

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Company Snapshot
Pune Cantonment Phone +91 20 67042777 Revenue 101,457 (million INR)
Pune , Maharashtra Fax +91 20 26822387 Net Profit 10,321.73 (million INR)
411036 Website [Link] Employees 6,110
BHARATFORG [National Industrial Goods and
India Exchange Industry
Stock Exchange of India] Machinery
Company Overview
Bharat Forge Ltd (BFL), a subsidiary of Kalyani Group is a metal manufacturing company that manufactures and exports automotive
components. The company offers automotive products such as crankshaft, connecting rod, emission or after treatment, fuel injection
system, steering knuckles, control arm, knuckle, fork, reinforcement, bracket, transmission components and driveline components. It
provides rotor shaft, thurst block, labryinth seal and trunion products. BFL business category includes automotive, power, oil and gas, rail,
marine, aerospace, construction and mining, and e-mobility. The company offers general engineering; product design validation and
testing services.

Key Executives Key Competitors

Name Title Name
Babasaheb Neelkanth Kalyani Chairman Metalyst Forgings Limited
Gopal Krishan Agarwal Deputy Managing Director Precision Wires India Limited
P H Ravikumar Director Ratnamani Metals and Tubes Ltd
Naresh Narad Director Hindalco Industries Ltd
Shobhan Madhukant Thakore Director Sanghvi Forging & Engineering Ltd
Source: Annual Report, Company Website, Primary and Secondary Research,
Source: Annual Report, Company Website, Primary and Secondary Research,
GlobalData
GlobalData

Share Data Financial Performance

Bharat Forge Ltd
Price (INR) as on 03-Jul-2019 462.80
EPS (INR) 22.17
Market Cap (million INR) 214,217
Enterprise Value (million INR) 245,545
Shares Outstanding (million) 466
Source: Annual Report, Company Website, Primary and Secondary Research,
GlobalData

Source: Annual Report, Company Website, Primary and Secondary

Research, GlobalData

Recent Developments

Jan 17,2018 Bharat Forge sets up E- Mobility Research & Development Centre in UK
Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Table of Contents
Table of Contents................................................................................................................................................................ ............... 3
List of Tables................................................................................................................................................................ .................. 4
List of Figures ................................................................................................................................................................ ................ 4
Section 1 - About the Company ................................................................................................................................ ......................... 5
Bharat Forge Ltd - Key Facts ................................................................................................................................ .............................. 5
Bharat Forge Ltd - Key Employees ................................................................................................................................ ..................... 6
Bharat Forge Ltd - Major Products and Services................................................................................................................................ 7
Bharat Forge Ltd - History................................................................................................................................................................ .. 8
Bharat Forge Ltd - Locations And Subsidiaries................................................................................................................................ ... 9
Head Office.................................................................................................................................................................................... 9
Other Locations & Subsidiaries ................................................................................................................................ ..................... 9
Section 2 – Company Analysis.......................................................................................................................................................... 10
Company Overview .......................................................................................................................................................................... 10
Bharat Forge Ltd - Key Competitors ................................................................................................................................................. 10
Section 3 – Company Financial Ratios ............................................................................................................................................. 11
Financial Ratios - Capital Market Ratios .......................................................................................................................................... 11
Financial Ratios - Annual Ratios ....................................................................................................................................................... 12
Performance Chart........................................................................................................................................................................... 15
Financial Performance ..................................................................................................................................................................... 15
Financial Ratios - Ratio Charts.......................................................................................................................................................... 16
Section 4 – Company’s Mergers & Acquisitions, Capital Raising and Alliances ............................................................................... 17
Bharat Forge Ltd, Transactions by Year, 2013 to YTD 2019 ........................................................................................................ 17
Bharat Forge Ltd, Transactions by Type, 2013 to YTD 2019........................................................................................................ 18
Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019 .................................................................................................... 19
Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019 .................................................................................................... 19
Bharat Forge Ltd, Recent Transactions Summary ............................................................................................................................ 20
Acquisition ....................................................................................................................................................................................... 21
GE Pacific Completes Acquisition of 49% Stake in Alstom Bharat Forge Power from Bharat Forge for USD35 Million .................. 21
Bharat Forge America to Acquire 100% stake in Walker Forge Tennessee (PMT Industries).......................................................... 22
CDP Bharat Forge Acquires Mecanique Generale Langroise For US$14.3 Million........................................................................... 23
Section 5 – Appendix ....................................................................................................................................................................... 24
Methodology ............................................................................................................................................................................... 24
Ratio Definitions .......................................................................................................................................................................... 24
About GlobalData ........................................................................................................................................................................ 28
Contact Us ................................................................................................................................................................................... 28
Disclaimer .................................................................................................................................................................................... 28

© GlobalData 2019. This product is licensed and is not to be photocopied. Page 3

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

List of Tables
Bharat Forge Ltd, Key Facts................................................................................................................................................................ 5
Bharat Forge Ltd, Key Employees ................................................................................................................................ ...................... 6
Bharat Forge Ltd, Major Products and Services................................................................................................................................ . 7
Bharat Forge Ltd, History ................................................................................................................................................................ ... 8
Bharat Forge Ltd, Subsidiaries ................................................................................................................................ ........................... 9
Bharat Forge Ltd, Key Competitors .................................................................................................................................................. 10
Bharat Forge Ltd, Ratios based on current share price.................................................................................................................... 11
Bharat Forge Ltd, Annual Ratios ...................................................................................................................................................... 12
Bharat Forge Ltd, Annual Ratios (Cont...1) ...................................................................................................................................... 13
Bharat Forge Ltd, Annual Ratios (Cont...2) ...................................................................................................................................... 14
Bharat Forge Ltd, Transactions by Year, 2013 to YTD 2019 ............................................................................................................. 17
Bharat Forge Ltd, Transactions by Type, 2013 to YTD 2019 ............................................................................................................ 18
Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019 ......................................................................................................... 19
Bharat Forge Ltd, Recent Transactions Summary ............................................................................................................................ 20
Currency Codes ................................................................................................................................................................................ 24
Capital Market Ratios....................................................................................................................................................................... 24
Equity Ratios .................................................................................................................................................................................... 25
Profitability Ratios............................................................................................................................................................................ 25
Cost Ratios ....................................................................................................................................................................................... 26
Liquidity Ratios................................................................................................................................................................................. 26
Leverage Ratios ................................................................................................................................................................................ 27
Efficiency Ratios ............................................................................................................................................................................... 27

List of Figures
Bharat Forge Ltd, Performance Chart (2015 - 2019)........................................................................................................................ 15
Bharat Forge Ltd, Ratio Charts ......................................................................................................................................................... 16
Bharat Forge Ltd, Transactions by Year, 2013 to YTD 2019 ............................................................................................................. 17
Bharat Forge Ltd, Transactions by Type, 2013 to YTD 2019 ............................................................................................................ 18
Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019 ......................................................................................................... 19

© GlobalData 2019. This product is licensed and is not to be photocopied. Page 4

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Section 1 - About the Company

Bharat Forge Ltd - Key Facts
Bharat Forge Ltd, Key Facts

Corporate Address Pune Cantonment, Pune , Ticker Symbol, Exchange BHARATFORG [National Stock
Maharashtra, 411036, India Exchange of India]

Telephone +91 20 67042777 No. of Employees 6,110

Fax +91 20 26822387 Fiscal Year End March

URL [Link] Revenue (in USD Million) 1,486.2

Industry Automotive, Energy and Revenue (in INR Million) 101,457.3

Utilities, Industrial Goods and
Machinery, Transportation,
Infrastructure & Logistics

Locations China, Germany, Hong Kong, India, Sweden, United States

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Bharat Forge Ltd - Key Employees

Bharat Forge Ltd, Key Employees

Name Job Title Board Level Since Age

Babasaheb Neelkanth Kalyani Chairman, Managing Director Executive Board 1993

Gopal Krishan Agarwal Deputy Managing Director, Executive Board 2013

Director
P H Ravikumar Director Non Executive Board
Naresh Narad Director Non Executive Board 2009
Shobhan Madhukant Thakore Director Non Executive Board 1986
Tridbesh Mukherjee Director Non Executive Board 2010
Basavraj Prabhakar Kalyani Director Non Executive Board 2006
Lalita Dileep Gupte Director Non Executive Board 2008
Prakash Chandrashekhar Bhalerao Director Non Executive Board 1998
Pratap Govind Pawar Director Non Executive Board 2005
Vimal Bhandari Director Non Executive Board 2013
Amit Babasaheb Kalyani Executive Director Senior Management 2009
Subodh Eknath Tandale Executive Director Senior Management 2006
Kishore Saletore Executive Director Senior Management 2015
Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Bharat Forge Ltd - Major Products and Services

BFL is a metal manufacturing company. The company offers key products and services in the following categories:

Bharat Forge Ltd, Major Products and Services

Products:

Chassis Components

PowerTrain Components

Tranmission Parts

Automotive Products:

Forged Crankshaft

Machined Crankshaft

Connecting Rod

Steering Knuckles

Piston

Valves

Surface Flow

Drill Bits

Sub-Sea Equipment

Services:

General Engineering Services

Product Design Validation and Testing

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Bharat Forge Ltd - History

Bharat Forge Ltd, History

2019 Acquisitions/Mergers/Takeovers In June, BFL agreed to acquire 45% interest in TORK Motors Private Limited.

2019 Acquisitions/Mergers/Takeovers In May, Bharat Forge announced its plans to acquire 26% stake in Aeron
Systems.

2019 Contracts/Agreements In June, the company announced its plans to form a joint venture with
Germany's Refu Electronik for the development and manufacture of electric
vehicle components.

2018 Acquisitions/Mergers/Takeovers In June, the company acquired a 35.26% stake in Tevva Motors (Jersey), for
GBP10 million.

2015 Contracts/Agreements In December, Rolls-Royce and Bharat Forge Limited signed agreement for
supply of critical & high integrity forged and machined components for a
range of aero engines including the flagship Trent engine.

2015 Contracts/Agreements In February, Bharat Forge Ltd entered into a contract with Boeing to supply
pre-machined titanium forgings for wing components for two aircraft
models.

2015 Contracts/Agreements In May, Alstom and Bharat Forge's joint venture formed for manufacturing
turbine and generator sets for power plants commenced the production.

2008 Contracts/Agreements In November, Alstom and Bharat Forge Ltd signed a shareholder’s agreement
for the creation of a joint venture company based in India.

1961 Incorporation/Establishment The company was incorporated.

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Bharat Forge Ltd - Locations And Subsidiaries

Head Office
Bharat Forge Ltd
Pune Cantonment
Pune
Maharashtra
411036
India
Tel: +91 20 67042777
Fax: +91 20 26822387

Other Locations & Subsidiaries

Bharat Forge Ltd, Subsidiaries

Bharat Forge America Bharat Forge Aluminiumtechnik GmbH

Berthelsdorfer Str. 8
2807 South Martin Luther King Jr. Boulevard Sachsen
Lansing Germany
Tel: +49 37322 16389
48910
Fax: +49 37322 16333
United States
Tel: +1 517 393 5300
Fax: +1 517 393 6256

Kalyani ALSTOM Power Ltd. CDP Bharat Forge GmbH

India Julius Saxler - Str.4
D 54550
Germany
Tel: +49 6592 9501 0
Fax: +49 6592 9501 11

Bharat Forge Beteiligungs GmbH Bharat Forge GmbH

Germany Julius Saxler - Str.4
Daun / Eifel
D 54550
Germany

Bharat Forge Hong Kong Limited Bharat Forge Kilsta AB

Hong Kong SE 69127
Sweden
Tel: +46 58663200
Fax: +46 58663209

FAW Bharat Forge BF New Technologies GmbH

Changchun Municipality Germany
Jilin Province
China

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Section 2 – Company Analysis

Company Overview
Bharat Forge Ltd (BFL), a subsidiary of Kalyani Group is a metal manufacturing company that manufactures and exports automotive
components. The company offers automotive products such as crankshaft, connecting rod, emission or after treatment, fuel injection system,
steering knuckles, control arm, knuckle, fork, reinforcement, bracket, transmission components and driveline components. It provides rotor
shaft, thurst block, labryinth seal and trunion products. BFL business category includes automotive, power, oil and gas, rail, marine,
aerospace, construction and mining, and e-mobility. The company offers general engineering; product design validation and testing services. It
has design engineering and product development, tool and die manufacturing, forging machining, testing and validation, quality testing
facility. The company caters to automotive, construction, mining, power, oil and gas, rail, marine and aerospace sectors. BFL is headquartered
in Pune, Maharashtra, India.

Bharat Forge Ltd - Key Competitors

Bharat Forge Ltd, Key Competitors
Name Headquarters Revenue (US$ m)
Hindalco Industries Ltd India 19,122
Metalyst Forgings Limited India 55
Precision Wires India Limited India 223
Ratnamani Metals and Tubes Ltd India 404
Sanghvi Forging & Engineering Ltd India 9
Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Section 3 – Company Financial Ratios

Financial Ratios - Capital Market Ratios
Bharat Forge Ltd, Ratios based on current share price

Key Ratios 03-Jul-2019

P/E (Price/Earnings) Ratio 20.75

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 11.95
Enterprise Value/Sales 2.42
Enterprise Value/Operating Profit 16
Enterprise Value/Total Assets 2.11
Dividend Yield 1.09
Note: Above ratios are based on share price as of 03-Jul-2019, the above ratios are absolute numbers
Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Published: July 2019

Financial Ratios - Annual Ratios

Bharat Forge Ltd, Annual Ratios
Key Ratios Unit/Currency 2015 2016 2017 2018 2019

Equity Ratios

EPS (Earnings per Share) INR 16.46 14.01 14.85 16.38 22.17

Dividend per Share INR 3.75 3.75 3.75 4.50 5

Dividend Cover Absolute 4.39 3.74 3.96 3.64 4.43

Book Value per Share INR 69.81 73.31 88.41 99.91 115.47

Cash Value per Share INR 7.51 7.97 0.46 0.86 10.21

Profitability Ratios

Gross Margin % 44.49 48.95 48.39 48.89 58.46

Operating Margin % 15.16 14.20 14.41 14.46 15.13

Net Profit Margin % 10 9.69 10.68 9.06 10.17

Profit Markup % 80.14 95.89 93.76 95.66 140.74

PBT Margin (Profit Before Tax) % 14.72 13.79 14.35 14.21 15.76

Return on Equity % 23.46 19.88 17.12 16.39 19.20

Return on Capital Employed % 21.40 18.33 16.75 19.43 20.37

Return on Assets % 9.72 8.25 8.21 8.07 9.53

Return on Working Capital % 62.50 71.75 93.77 147.15 107.32

Growth Ratios

Sales Growth % 13.50 -8.14 -5.76 27.53 20.57

Operating Income Growth % 48.74 -13.97 -4.37 28 26.12

EBITDA Growth % 31.35 -4.66 -3.07 19.60 22.53

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Bharat Forge Ltd, Annual Ratios (Cont...1)

Key Ratios Unit/Currency 2015 2016 2017 2018 2019

Net Income Growth % 52.96 -11.03 3.86 8.21 35.38

EPS Growth % 63.87 -10.87 -9.21 37.78 25.20

Working Capital Growth % 66.34 -25.07 -26.83 -18.43 72.93

Cost Ratios

Operating Costs (% of Sales) % 84.84 85.80 85.59 85.54 84.87

Administration Costs (% of Sales) % 21.95 24.08 24.33 23.31 12.28

Liquidity Ratios

Current Ratio Absolute 1.67 1.48 1.32 1.22 1.35

Quick Ratio Absolute 1.34 1.13 0.96 0.85 0.90

Cash Ratio Absolute 0.39 0.41 0.36 0.18 0.28

Leverage Ratios

Debt to Equity Ratio % 1.01 0.99 0.76 0.70 0.70

Net Debt to Equity Absolute 0.90 0.88 0.69 0.65 0.61

Debt to Capital Ratio % 0.50 0.50 0.43 0.41 0.41

Efficiency Ratios

Asset Turnover Absolute 0.97 0.85 0.77 0.89 0.94

Fixed Asset Turnover Absolute 2.51 2.17 1.86 2.27 2.48

Inventory Turnover Absolute 4.11 3.68 3.17 3.42 2.61

Current Asset Turnover Absolute 1.75 1.58 1.56 1.91 2.01

Capital Employed Turnover Absolute 1.41 1.29 1.16 1.34 1.35

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Published: July 2019

Bharat Forge Ltd, Annual Ratios (Cont...2)

Key Ratios Unit/Currency 2015 2016 2017 2018 2019

Working Capital Turnover Absolute 4.12 5.05 6.51 10.18 7.09

Revenue per Employee INR 16,605,128

Net Income per Employee INR 1,689,318

Capex to Sales % 13.69 12.81 9.93 6.95

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Performance Chart
Bharat Forge Ltd, Performance Chart (2015 - 2019)

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

Financial Performance
The company reported revenues of (Rupee) INR101,457.3 million for the fiscal year ended March 2019 (FY2019), an increase of 20.6% over
FY2018. In FY2019, the company’s operating margin was 15.1%, compared to an operating margin of 14.5% in FY2018. In FY2019, the
company recorded a net margin of 10.2%, compared to a net margin of 9.1% in FY2018.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Financial Ratios - Ratio Charts

Bharat Forge Ltd, Ratio Charts

EPS Operating Margin

Return on Equity Return on Assets

Debt to Equity Ratio Current Ratio

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Section 4 – Company’s Mergers & Acquisitions, Capital Raising and Alliances

Bharat Forge Ltd, Transactions by Year, 2013 to YTD 2019

Bharat Forge Ltd, Transactions by Year, 2013 to YTD 2019

Note: Deals include all announced deals from 2013 onwards, deal values included wherever disclosed. GlobalData
Above data is extracted from GlobalData’s Deals and Alliances Profile.

Bharat Forge Ltd's, deal volume increased from zero deals in 2017 to one deal in 2018. No deals were reported by the company in YTD 2019.

Bharat Forge Ltd, Transactions by Year, 2013 to YTD 2019

YEAR No. of Deals Deal value ($m)

2013 0 0
2014 0 0
2015 1 14.28
2016 1 14
2017 0 0
2018 1 35
YTD 2019 0 0
Note: Deals include all announced deals from 2013 onwards, deal values included wherever [Link] data is extracted GlobalData
from GlobalData’s Deals and Alliances Profile.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Bharat Forge Ltd, Transactions by Type, 2013 to YTD 2019

Bharat Forge Ltd, Transactions by Type, 2013 to YTD 2019

Note: Deals include all announced deals from 2013 onwards GlobalData
Above data is extracted from GlobalData’s Deals and Alliances Profile.

Bharat Forge Ltd’s deals activity has been reportedly focusing on with three deals during the period 2013 to YTD 2019.

Bharat Forge Ltd, Transactions by Type, 2013 to YTD 2019

Deal type No. of Deals Deal Value (US$ million)

Acquisition 3 63.28
Note: Deals include all announced deals from 2013 onwards, deal values included wherever [Link] data is extracted GlobalData
from GlobalData’s Deals and Alliances Profile.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Published: July 2019

Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019

Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019

Note: Deals include all announced deals from 2013 onwards, deal values included wherever disclosed. GlobalData
Above data is extracted from GlobalData’s Deals and Alliances Profile.

Bharat Forge Ltd, reported one deal in Asia-Pacific, Europe, and North America during the period 2013 to YTD 2019.

Bharat Forge Ltd, Transactions by Region, 2013 to YTD 2019

Region No. of Deals Deal Value (US$ million)

Asia-Pacific 1 35
Europe 1 14.28
North America 1 14
Note: Deals include all announced deals from 2013 onwards, deal values included wherever [Link] data is extracted GlobalData
from GlobalData’s Deals and Alliances Profile.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Bharat Forge Ltd, Recent Transactions Summary

Bharat Forge Ltd, Recent Transactions Summary

Deal Date Deal type Deal Status Deal Headline Deal Value (US $
million

27-Feb-2018 Acquisition Completed GE Pacific Completes Acquisition of 49% Stake in 35.00

Alstom Bharat Forge Power from Bharat Forge for
USD35 Million
18-Nov-2016 Acquisition Announced Bharat Forge America to Acquire 100% stake in 14.00
Walker Forge Tennessee (PMT Industries)
02-Jan-2015 Acquisition Completed CDP Bharat Forge Acquires Mecanique Generale 14.28
Langroise For US$14.3 Million
Note: Deals include all announced deals from 2013 onwards, deal values included wherever disclosed. GlobalData
Above data is extracted from GlobalData’s Deals and Alliances Profile.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Acquisition
GE Pacific Completes Acquisition of 49% Stake in Alstom Bharat Forge Power from Bharat
Forge for USD35 Million
GE Pacific Completes Acquisition of 49% Stake in Alstom Bharat Forge Power from Bharat Forge for USD35 Million
Deal Type Acquisition Deal Sub Type Minority Acquisition
Deal in Brief
GE Pacific Private Limited, a holding company that manufactures and supply electronic components, power generation equipment, engine
components, lighting products, and wind turbines through its subsidiaries, has completed acquisition of 49% stake in Alstom Bharat Forge
Power Private Limited, a company engaged in designing, engineering and manufacturing turbines and generators of 600-800 MW
supercritical range, from Bharat Forge Limited (BFL), a manufacturer and seller of engine and chassis components, for a purchase
consideration of USD35 [Link] November 10, 2016, Alstom S.A., a company engaged in providing equipment and services for power
generation and rail transport, and Bharat Forge have formed Alstom Bharat Forge Power joint venture. Alstom held 51 % stake in the joint
venture company, while Bharat Forge held 49% [Link] History:Completed: On February 27, 2018, GE Pacific has acquired remaining
26% stake in Alstom Bharat Forge Power from Bharat [Link]: On March 24, 2017, GE Pacific has acquired 23% stake in Alstom
Bharat Forge Power from Bharat [Link]: On November 8, 2016, GE Pacific agreed to acquire 49% stake in Alstom Bharat Forge
Power from Bharat Forge for a purchase consideration of USD35 million.
Deal Information
Deal Status Completed
Announced Date 08-Nov-2016

Completed Date 27-Feb-2018

% Acquired 49
Deal Financials
Deal Value (US$ m) 35
Companies Information
Acquirer Company Information
Company Name GE Pacific Pte Ltd

Vendor Company Information

Company Name Bharat Forge Ltd Parent Kalyani Group

Business Description
Bharat Forge Ltd (BFL), a subsidiary of Kalyani Group is a metal manufacturing company that manufactures and exports automotive
components. The company offers automotive products such as crankshaft, connecting rod, emission or after treatment, fuel injection
system, steering knuckles, control arm, knuckle, fork, reinforcement, bracket, transmission components and driveline components. It
provides rotor shaft, thurst block, labryinth seal and trunion products. BFL business category includes automotive, power, oil and gas, rail,
marine, aerospace, construction and mining, and e-mobility. The company offers general engineering; product design validation and
testing services. It has design engineering and product development, tool and die manufacturing, forging machining, testing and validation,
quality testing facility. The company caters to automotive, construction, mining, power, oil and gas, rail, marine and aerospace sectors. BFL
is headquartered in Pune, Maharashtra, India.
Target Company Information
Company Name Alstom Bharat Forge Power Ltd
Source: GlobalData

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Bharat Forge America to Acquire 100% stake in Walker Forge Tennessee (PMT Industries)
Bharat Forge America to Acquire 100% stake in Walker Forge Tennessee (PMT Industries)
Deal Type Acquisition Deal Sub Type 100% Acquisition
Deal in Brief
Bharat Forge America, Inc. (BFA), a wholly-owned subsidiary of Bharat Forge Limited, has agreed to acquire 100% stake in Walker Forge
Tennessee, LLC (formerly PMT Industries, LLC), a provider of complex, steel and high alloy steel, engine and chassis components to a range
of customers across automotive and industrial sectors, for USD14 million. BFA and Walker are based in the US, while Bharat Forge is based
in India. Bharat Forge is a diversified business group engaged in automotive, power, oil and gas, construction and mining, locomotive,
marine and aerospace [Link] transaction will be funded through Bharat Forge’ internal accruals and [Link] is expected to
generate revenues of USD28 million in 2016.
Deal Rationale
The acquisition will enable Bharat Forge’s to create a manufacturing footprint in North America. It will also allow Bharat Forge to increase
its product offering into the passenger car and commercial vehicle segments as well into industrial sectors such as construction and mining
and allied industries.
Deal Information
Deal Status Announced

Announced Date 18-Nov-2016

% Acquired 100
Deal Financials
Deal Value (US$ m) 14
Companies Information
Acquirer Company Information
Company Name Bharat Forge America Parent Bharat Forge Ltd
Target Company Information
Company Name PMT Industries, LLC

Business Description
PMT Industries, LLC is a manufacturer of complex, high-alloy steel forgings for safety-critical engine and chassis applications.
PMT Industries products include articulated pistons, mono-type pistons, connecting rods, automotive / suv / light-truck
knuckles, automotive / suv / light-truck control arms, and heavy truck knuckles.
Source: GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

CDP Bharat Forge Acquires Mecanique Generale Langroise For US$14.3 Million
CDP Bharat Forge Acquires Mecanique Generale Langroise For US$14.3 Million
Deal Type Acquisition Deal Sub Type 100% Acquisition
Deal in Brief
CDP Bharat Forge GmbH, a subsidiary of Bharat Forge Limited (Bharat Forge), acquired Mecanique Generale Langroise, an oil and gas
machining company, for a purchase consideration of €11.8 million (MM) (US$14.28 MM).MGL is a technology-oriented company focused
on precision machining and other high value-added processes such as cladding for critical application in the oil and gas industry. MGL
supplies turnkey components for drilling applications, such as blow out preventers and surface/sub-sea well-heads, and the power sector.
It primarily caters to premium global oil and gas customers, all of whom are already customers of Bharat [Link] transaction enables
Bharat Forge to strengthen its position in the oil and gas sector by enhancing service offerings and geographical [Link] N Kalyani,
chairman and managing director of Bharat Forge, said, “The acquisition is in line with our strategy of moving up the value chain in the
industrial business. It enhances Bharat Forge’s ability to provide turnkey solutions and strengthens its product offering in the oil and gas
sector.”
Deal Rationale
The transaction enables Bharat Forge to strengthen its position in the oil and gas sector by enhancing service offerings and geographical
reach.
Deal Information
Deal Status Completed
Completed Date 02-Jan-2015

% Acquired 100
Deal Financials
Deal Value (EUR million) 11.80 Deal Value (US$ m) 14.28
Companies Information
Acquirer Company Information
Company Name CDP Bharat Forge GmbH Parent Bharat Forge Ltd
Target Company Information
Company Name Mecanique Generale Langroise
Source: GlobalData

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

Section 5 – Appendix
The data and analysis within this report is driven by GlobalData.

GlobalData gives you key information to drive sales, investment and deal making activity in your business.

Our coverage includes 200,000 + reports on 185,000+ companies (including 150,000+ private) across 200+ countries and 29 industries. The
key industries include Alternative Energy, Oil & Gas, Clean Technology, Technology and Telecommunication, Pharmaceutical and Healthcare,
Power, Financial Services, Chemical and Metal & Mining.

Methodology
GlobalData company reports are based on a core set of research techniques which ensure the best possible level of quality and accuracy of
data. The key sources used include:

• Company Websites
• Company Annual Reports
• SEC Filings
• Press Releases
• Proprietary Databases

Currency Codes

Currency Code Currency

INR Rupee
GlobalData

Ratio Definitions

Capital Market Ratios

Capital Market Ratios measure investor response to owning a company's stock and also the cost of issuing stock.
Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income earned
per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more
Price/Earnings Ratio
for each unit of income, so the stock is more expensive compared to one with lower P/E ratio. A high P/E
(P/E)
suggests that investors are expecting higher earnings growth in the future compared to companies with a
lower P/E. Price per share is as of previous business close, and EPS is from latest annual report.
Calculation: Market Cap / Net Income
Enterprise Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with, or as an
Value/Earnings before alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that it is unaffected by a
Interest, Tax, company's capital structure. It compares the value of a business, free of debt, to earnings before interest.
Depreciation & Price per share is as of previous business close, and shares outstanding last reported. Other items are from
Amortization latest annual report.
(EV/EBITDA) Calculation: {(Market Cap + Debt + Minority Interest + Preferred Stock (Redeemable + Non-
Redeemable) - Cash & Cash Equivalents)} / (Operating Income + Depreciation + Amortization)
Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy the company's
sales. EV/Sales is seen as more accurate than Price/Sales because market capitalization does not take into
account the amount of debt a company has, which needs to be paid back at some point. Price per share is
Enterprise Value/Sales
as of previous business close, and shares outstanding last reported. Other items are from latest annual
report.
Calculation: {(Market Cap + Debt + Minority Interest + Preferred Stock (Redeemable + Non-
Redeemable) - Cash & Cash Equivalents)} / Revenue

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Published: July 2019

Enterprise Value/Operating Profit measures the company's enterprise value to the operating profit. Price
Enterprise per share is as of previous business close, and shares outstanding last reported. Other items are from latest
Value/Operating Profit annual report.
Calculation: {(Market Cap + Debt + Minority Interest + Preferred Stock (Redeemable + Non-
Redeemable) - Cash & Cash Equivalents)} / Operating Income
Enterprise Value/Total Assets measures the company's enterprise value to the total assets. Price per share
Enterprise Value/Total is as of previous business close, and shares outstanding last reported. Other items are from latest annual
Assets report.
Calculation: {(Market Cap + Debt + Minority Interest + Preferred Stock (Redeemable + Non-
Redeemable) - Cash & Cash Equivalents)} / Total Assets

Dividend Yield Dividend Yield shows how much a company pays out in dividends each year relative to its share price. In
the absence of any capital gains, the dividend yield is the return on investment for a stock.
Calculation: Annual Dividend per Share / Price per Share
GlobalData

Equity Ratios

These ratios are based on per share value.

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of
Earnings per Share (EPS) common stock. EPS serves as an indicator of a company's profitability.
Calculation: Net Income / Weighted Average Shares

Dividend per Share Dividend is the distribution of a portion of a company's earnings, decided by the board of
directors, to a class of its shareholders.

Dividend Cover Dividend cover is the ratio of company's earnings (net income) over the dividend paid to shareholders.
Calculation: Earnings per share / Dividend per share

Book Value per Share measure used by owners of common shares in a firm to determine the level of safety
Book Value per Share associated with each individual share after all debts are paid accordingly.
Calculation: {Shareholders Equity - Preferred Stock (Redeemable + Non-Redeemable)} / Outstanding
Shares

Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance sheet) that is
Cash Value per Share determined by dividing cash & equivalents by the total shares outstanding.
Calculation: Cash & equivalents / Outstanding Shares

GlobalData

Profitability Ratios

Profitability Ratios are used to assess a company's ability to generate earnings, based on revenues generated or resources used. For
most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that
the company is doing well.
Gross margin is the amount of contribution to the business enterprise, after paying for direct-fixed and
Gross Margin direct-variable unit costs.
Calculation: (Gross Profit / Revenue}*100

Operating Margin Operating Margin is a ratio used to measure a company's pricing strategy and operating efficiency.
Calculation: (Operating Income / Revenue) *100

Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that shows
Net Profit Margin how much of each dollar earned by the company is translated into profits.
Calculation: (Net Profit / Revenue) *100

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Published: July 2019

Profit Markup Profit Markup measures the company's gross profitability, as compared to the cost of revenue.
Calculation: Gross Income / Cost of Revenue

PBIT Margin (Profit Profit Before Interest & Tax Margin shows the profitability of the company before interest expense &
Before Interest & Tax) taxation.
Calculation: {(Net Profit+Interest+Tax) / Revenue} *100

PBT Margin (Profit Profit Before Tax Margin measures the pre-tax income over revenues.
Before Tax)
Calculation: {Net Income Before Tax / Revenue} *100

Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the
Return on Equity common stock owners.
Calculation: (Net Income / Shareholders Equity)*100

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a company's capital
Return on Capital investments. ROCE should always be higher than the rate at which the company borrows; otherwise any
Employed increase in borrowing will reduce shareholders' earnings.
Calculation: Operating Income / (Total Assets – Current Liabilities) * 100

Return on Assets is an indicator of how profitable a company is relative to its total assets, the ratio
Return on Assets
measures how efficient management is at using its assets to generate earnings.
Calculation: (Net Income / [Current Year Total Assets + Last Year Total Assets)/2])*100

Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant &
Return on Fixed Assets equipment).
Calculation: (Net Income / [Current Year Fixed Assets + Last Year Fixed Assets)/2]) * 100

Return on Working
Return on Working Capital measures the company's profitability to its working capital.
Capital
Calculation: {Operating Income / (Current Assets-Current Liabilities)} * 100

GlobalData

Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of sales.

Operating costs (% of Operating costs as percentage of total revenues measures the operating costs that a company incurs
Sales) compared to the revenues.
Calculation: (Operating Expenses / Revenue) *100

Administration costs (% Administration costs as percentage of total revenue measures the selling, general and administrative
of Sales) expenses that a company incurs compared to the revenues.
Calculation: (Administrative Expenses / Revenue) *100

Interest costs (% of Interest costs as percentage of total revenues measures the interest expense that a company incurs
Sales) compared to the revenues.
Calculation: (Interest Expenses / Revenue) *100

GlobalData

Liquidity Ratios

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value
of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. A company's ability to turn short-
term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and
mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Published: July 2019

Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an idea of the
company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash,
Current Ratio inventory, receivables). The higher the current ratio, the more capable the company is of paying its
obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they
came due at that point.
Calculation: Current Assets / Current Liabilities

Quick Ratio Quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.
Calculation: (Current Assets - Inventories) / Current Liabilities

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only looks at the
most liquid short-term assets of the company, which are those that can be most easily used to pay off
Cash Ratio current obligations. It also ignores inventory and receivables, as there are no assurances that these two
accounts can be converted to cash in a timely matter to meet current liabilities.
Calculation: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

GlobalData

Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to
measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses.
Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also depends on
Debt to Equity Ratio the industry in which the company operates. For example, capital-intensive industries tend to have a higher
debt-equity ratio.
Calculation: Total Debt / Shareholders Equity

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its operations,
along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the
company has compared to its equity. This indicates to investors whether a company is more prone to using
Debt to Capital Ratio debt financing or equity financing. A company with high debt-to-capital ratios, compared to a general or
industry average, may show weak financial strength because the cost of these debts may weigh on the
company and increase its default risk.
Calculation: {Total Debt / (Total Debt + Shareholders Equity)}

Interest Coverage Ratio is used to determine how easily a company can pay interest on outstanding debt,
Interest Coverage Ratio
calculated as earnings before interest & tax by interest expense.
Calculation: Operating Income / Interest Expenses
GlobalData

Efficiency Ratios

Efficiency ratios measure a company's effectiveness in various areas of its operations, essentially looking at maximizing its use of
resources.
Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate sales. A
higher ratio indicates the business has less money tied up in fixed assets for each currency unit of sales
Fixed Asset Turnover revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other
fixed assets.
Calculation: Revenue / [Current Year Fixed Assets + Last Year Fixed Assets)/2]

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales revenue to
Asset Turnover the company. A higher asset turnover ratio shows that the company has been more effective in using its
assets to generate revenues.
Calculation: Revenue / [Current Year Total Assets + Last Year Total Assets)/2]

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
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Published: July 2019

Current Asset Turnover Current Asset Turnover indicates how efficiently the business uses its current assets to generate sales.
Calculation: Revenue / [Current Year Current Assets + Last Year Current Assets)/2]

Inventory Turnover ratio shows how many times a company's inventory is sold and replaced over a period.
Inventory Turnover A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales
or ineffective buying.
Calculation: Cost of Goods Sold /[Current Year Inventory + Last Year Inventory)/2]

Working Capital Turnover is a measurement to compare the depletion of working capital to the generation
Working Capital of sales. This provides some useful information as to how effectively a company is using its working capital
Turnover to generate sales.
Calculation: Revenue / (Current Assets – Current Liabilities)

Capital Employed Capital employed turnover ratio measures the efficiency of a company's use of its equity in generating sales
Turnover revenue to the company.
Calculation: Revenue / (Total Assets – Current Liabilities)

Capex to Sales ratio measures the company's expenditure (investments) on fixed and related assets'
Capex to sales effectiveness when compared to the sales generated.
Calculation: (Capital Expenditure / Sales) *100

Net income per Net income per Employee looks at a company's net income in relation to the number of employees they
Employee have. Ideally, a company wants a higher profit per employee possible, as it denotes higher productivity.
Calculation: Net Income / No. of Employees

Revenue per Employee measures the average revenue generated per employee of a company. This ratio is
Revenue per Employee most useful when compared against other companies in the same industry. Generally, a company seeks the
highest revenue per employee.
Calculation: Revenue / No. of Employees

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is losing a larger
Efficiency Ratio percentage of its income to expenses. If the efficiency ratio is getting lower, it is good for the bank and its
shareholders.
Calculation: [Non-interest expense / (Net Interest Income + Non-Interest Income)] * 100

GlobalData

Notes
• Financial information of the company is taken from the most recently published annual reports or SEC filings
• The financial and operational data reported for the company is as per the industry defined standards
• Revenue converted to USD at average annual conversion rate as of fiscal year end
About GlobalData
GlobalData is one of the world’s leading providers of company operational data and strategic analysis, providing detailed information on tens
of thousands of companies globally. Our highly qualified team of Analysts, Researchers, and Solution Consultants use proprietary data sources
and various tools and techniques to gather, analyze and represent the latest and the most reliable information essential for businesses to
sustain a competitive edge. Data is continuously updated and revised by large teams of research experts, so that it always reflects the latest
events and information. With a large dedicated research and analysis capability, GlobalData employs rigorous primary and secondary research
techniques in developing unique data sets and research material for this series and its other reports. GlobalData offers comprehensive
geographic coverage across world’s most important sectors, focusing particularly on energy and healthcare.
Contact Us
If you have any queries about this report or would like further information, please contact info@[Link]
Disclaimer
All Rights Reserved
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData.

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 Bharat Forge Ltd (BHARATFORG) - Financial Analysis Review
Report Code: GDIGM27790FA
Published: July 2019

The data and analysis within this report is driven by GlobalData from its own primary and secondary research of public and proprietary
sources and does not necessarily represent the views of the company profiled.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings,
conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith from both primary and
secondary sources, whose accuracy we are not always in a position to guarantee. As such GlobalData can accept no liability whatever for
actions taken based on any information that may subsequently prove to be incorrect.

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 MarketLine Financial Deals

Vendor, acquirer, target and partner report for Bharat Forge Ltd and its subsidiaries. Includes
Mergers & Acquisitions, Private equity, Venture capital, Joint ventures, Alliances and
Investments

Bharat Forge Ltd – Mergers & Acquisitions

(M&A), Partnerships & Alliances and
Investments

REFERENCE CODE: 7E8872AB-37FD-4B45-A01C-BB3A3F6E0DF9

PUBLICATION DATE: June 2019
[Link]
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31
COMPANY OVERVIEW AND KEY FACTS

COMPANY OVERVIEW AND KEY FACTS

BHARAT FORGE LTD

Bharat Forge Limited (BFL), a subsidiary of Kalyani Group is a machine component manufacturer that markets
automotive and other industrial components. The company manufactures critical and safety components for the
automotive and non-automotive sector. It also manufactures chassis components. BFL offers automotive products
such as forged crankshaft, machined crankshaft, connecting rod and piston. The company offers valves, surface flow,
drill bits, and sub-sea equipments for oil and gas sector. It offers mining, construction and general engineering
services. The company serves automotive,construction and mining, power, oil and gas, rail, marine and aerospace
sectors. BFL is headquartered in Pune, Maharashtra, India.

Key facts

Address Pune Cantonment, Mundhwa

State Maharashtra

Country India

Telephone 91 20 67042777

Fax 91 20 6822387

Website [Link]

Exchange / Ticker NSE / BHARATFORG

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019

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COMPANY OVERVIEW AND KEY FACTS

Bharat Forge Ltd activity by deal type - volume (trailing

Bharat Forge Ltd M&A activity by geography (TTM)
twelve months (TTM))

Source: Financial Deals MARKETLINE Source: Financial Deals MARKETLINE

Deal type Volume Geography Volume

Acquisition 1 North America -
Capital raising - Europe -
Corporate venturing 1 Asia-Pacific 1
Divestments - Middle East and Africa -
Partnership 1 South and Central America -
Private equity -

Bharat Forge Ltd activity by deal type - volume (2015-

Bharat Forge Ltd M&A average deal size - value ($m)
YTD2019)

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019

Source: Financial Deals MARKETLINE Source: Financial Deals MARKETLINE

Deal type 2015 2016 2017 2018 2019 Year Number of deals Average deal size ($m)
Acquisition (ACQ) - - - - 1 2015 - -
Corporate - - - - 1 2016 - -
venturing (CV) 2017 - -
Partnership - - - - 1 2018 - -
(Pship)
2019 1 -
Note: Zero deal value indicates transactions with undisclosed deal values

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33
COMPANY OVERVIEW AND KEY FACTS

TOP DEALS IN (2015 -YTD2019)

Deal value
Target/Partner (Country) Announcement date Deal status Deal Type
($m)

Private
Aeron Systems Private Limited (India) May 22, 2019 Announced 1.43
placement

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019

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TABLE OF CONTENTS

TABLE OF CONTENTS

COMPANY OVERVIEW AND KEY FACTS ............................................ 2

TABLE OF CONTENTS .......................................................................... 5

LIST OF TABLES .................................................................................... 6

LIST OF FIGURES .................................................................................. 6

TARGETS AND PARTNERS .................................................................. 7

MERGERS & ACQUISITIONS ................................................................ 8

Mergers and Acquisitions – Overview ............................................................................................... 8

Mergers and Acquisitions – Deal reports .......................................................................................... 9

CORPORATE VENTURING .................................................................. 10

Corporate Venturing – Overview ...................................................................................................... 10

Corporate Venturing – Deal reports ................................................................................................. 11

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
PARTNERSHIP ..................................................................................... 13
Partnership – Overview ..................................................................................................................... 13

Partnership – Deal reports ................................................................................................................ 14

APPENDIX............................................................................................. 15
Contact Us ......................................................................................................................................... 15

About MarketLine Financial Deals Database ................................................................................... 15

Deal Definition and Methodology ..................................................................................................... 17

About MarketLine ............................................................................................................................... 24

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TABLE OF CONTENTS

LIST OF TABLES

Table 1: Bharat Forge Ltd M&A volume and value trend (2015-YTD2019) 8

Table 2: Bharat Forge Ltd M&A activity by geography (2015-YTD2019) 8

Table 3: Bharat Forge Ltd corporate venturing volume and value trend (2015-YTD2019) 10

Table 4: Bharat Forge Ltd corporate venturing by geography (2015-YTD2019) 10

Table 5: Bharat Forge Ltd partnership volume and value trend (2015-YTD2019) 13

Table 6: Bharat Forge Ltd partnership trend by key deal type (2015-YTD2019) 13

LIST OF FIGURES

Figure 1: Bharat Forge Ltd M&A volume and value trend (2015-YTD2019) 8

Figure 2: Bharat Forge Ltd M&A activity by geography (2015-YTD2019) 8

Figure 3: Bharat Forge Ltd corporate venturing volume and value trend (2015-YTD2019) 10

Figure 4: Bharat Forge Ltd corporate venturing by geography (2015-YTD2019) 10

Figure 5: Bharat Forge Ltd partnership volume and value trend (2015-YTD2019) 13

Figure 6: Bharat Forge Ltd partnership trend by key deal type (2015-YTD2019) 13

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019

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TARGETS AND PARTNERS

TARGETS AND PARTNERS

Bharat Forge Ltd targets and partners (2015 -YTD2019)

Bharat Forge Ltd-Target/Partner name Deal Date Deal type Deal value ($m)

Refu Electronik GmbH (Germany) Jun 7, 2019 Partnership -

Tork Motorcycles (India) Jun 4, 2019 Acquisition -

Aeron Systems Private Limited (India) May 22, 2019 Private placement 1.43

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019

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MERGERS & ACQUISITIONS

MERGERS & ACQUISITIONS

Mergers and Acquisitions – Overview

Figure 1: Bharat Forge Ltd M&A volume and value trend Figure 2: Bharat Forge Ltd M&A activity by geography (2015-
(2015-YTD2019) YTD2019)

Source: Financial Deals MARKETLINE Source: Financial Deals MARKETLINE

Note: Zero deal value indicates transactions with undisclosed deal values

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Table 1: Bharat Forge Ltd M&A volume and value trend (2015- Table 2: Bharat Forge Ltd M&A activity by geography (2015-
YTD2019) YTD2019)

Year Volume Value ($m) Geography Volume

2015 - - North America -

2016 - - Europe -

2017 - - Asia-Pacific 1

2018 - - Middle East and Africa -

2019 1 - South and Central America -

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MERGERS & ACQUISITIONS

Mergers and Acquisitions – Deal reports

Deal Report: Bharat Forge to Acquire Additional Stake in Tork Motor

Deal in brief

Bharat Forge Limited, an Indian manufacturer of forged and machined engine and chassis components,
has agreed to acquire additional stake in Tork Motors Pvt. Ltd. (Tork Motorcycles), an electric motorcycle
company. Both companies involved in the transaction are based in India.

Bharat Forge has subscribed 1,895 equity shares of Rs. 10/- each at a premium of Rs. 21,103/- per equity
share of TORK.

Target Tork Motorcycles

Acquirer Bharat Forge Ltd

Deal status Announced

Deal category Acquisition

Deal sub-category Minority acquisition

Date of announcement Jun 04, 2019

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Company information: Target and acquirer

Target: Tork Motorcycles

Company type Private

Business description Tork Motorcycles is an electric motorcycle company.

Automotive
Industry
Automotive-->Vehicle Manufacturing-->Motorcycles
Technology and Services

Country India

Website [Link]

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CORPORATE VENTURING

CORPORATE VENTURING
Corporate Venturing – Overview

Figure 3: Bharat Forge Ltd corporate venturing volume and Figure 4: Bharat Forge Ltd corporate venturing by geography
value trend (2015-YTD2019) (2015-YTD2019)

Source: Financial Deals MARKETLINE Source: Financial Deals MARKETLINE

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Table 3: Bharat Forge Ltd corporate venturing volume and Table 4: Bharat Forge Ltd corporate venturing by geography
value trend (2015-YTD2019) (2015-YTD2019)

Year Volume Value ($m) Geography Volume

2015 - - North America -

2016 - - Europe -

2017 - - Asia-Pacific 1

2018 - - Middle East and Africa -

2019 1 1.43 South and Central America -

10

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CORPORATE VENTURING

Corporate Venturing – Deal reports

Deal Report: Bharat Forge to Acquire 26% Stake in Aeron Systems

Deal in brief

Bharat Forge Ltd (BFL), a subsidiary of Kalyani Group, a metal manufacturing company that manufactures
and exports automotive components, has agreed to subscribe to 97,500 equity shares, representing 26%
stake in Aeron Systems Private Limited, a company engaged in the business of manufacturing of
technology products such as Inertial Navigation Systems (INS) and loT devices.

The total cash consideration of the purchase of 26% stake in Aeron is agreed at INR10 crore.

Pursuant to the transaction, Bharat Forge will acquire shares in three tranches in Aeron Systems.

Target Aeron Systems Private Limited

Acquirer Bharat Forge Ltd

Deal status Announced

Deal value ($m) 1.43

Deal value (Indian Rupee)(m) 100

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Deal category Private placement

No. of shares issued 97,500

Date of announcement May 22, 2019

Security type information

Security type Common stock

Company information: Target and acquirer

Target: Aeron Systems Private Limited

Company type Private

Aeron Systems Private Limited is a company engaged in the

Business description business of manufacturing of technology products such as
Inertial Navigation Systems (INS) and loT devices.
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CORPORATE VENTURING

Industry Technology and Services

Technology and Services

Country India

Website [Link]

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PARTNERSHIP

PARTNERSHIP
Partnership – Overview

Figure 5: Bharat Forge Ltd partnership volume and value Figure 6: Bharat Forge Ltd partnership trend by key deal
trend (2015-YTD2019) type (2015-YTD2019)

Source: Financial Deals MARKETLINE Source: Financial Deals MARKETLINE

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Note: Zero deal value indicates transactions with undisclosed deal values

Table 5: Bharat Forge Ltd partnership volume and value trend Table 6: Bharat Forge Ltd partnership trend by key deal type
(2015-YTD2019) (2015-YTD2019)

Year Volume Value ($m) Type of partnership Volume

2015 - - Joint Venture 1

2016 - -

2017 - -

2018 - -

2019 1 -
Note: One patnership agreement can have multiple deal types

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PARTNERSHIP

Partnership – Deal reports

Deal Report: Bharat Forge to Form Joint Venture with Refu Electronik

Deal in brief

Bharat Forge Ltd has entered into a Joint Venture Agreement with Refu Electronik GmbH, Germany and its
Affiliates, Promoters for incorporating a Joint Venture Company, under the laws of Germany for developing,
manufacturing and selling on board controllers and components, drives, invertor, converters and all kind of
auxiliary applications, related power electronics and battery management, for all quality of e-mobility
vehicles viz, hybrid and electric 2 wheeler, 3 wheeler, cars and commercial vehicles.

Both the parties will have joint management with equal rights to appoint Board with equal capital
contribution and representation.

In the proposed Joint Venture Company, the Company will hold 50% of stake by making an investment of
EUR11.35 Million by way of equity shares at nominal value of Euro 1, subject to fulfillment of conditions in
Share Purchase Agreement and JV Agreement between the parties.

Partner 1 Bharat Forge Ltd

Partner 2 Refu Electronik GmbH

Deal status Announced

Deal category Partnership

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Deal sub-category Joint venture

Date of announcement Jun 07, 2019

Company information: Partners

Partner 1: Refu Electronik GmbH

Company type Private

Refu Electronik GmbH is a manufacturer of electronic

Business description
products.

Industry Industrial Goods and Machinery-->Electrical Components

and Equipment

Country Germany

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APPENDIX

APPENDIX
Contact Us

We hope that the data and analysis in this profile will help you make informed and imaginative
business decisions. If you have further requirements feedback please contact us at
assistme@[Link].
For further information on MarketLine and our range of business information services please visit
[Link]

About MarketLine Financial Deals Database

• Financial Deals is the most extensive Deals database currently available in the market

• The database provides research and analysis on all types of financial deals including:
– merger and acquisition
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– venture capital investment
– initial public offering (IPO)
– secondary offering
– private placement
– partnership deal

• The database is a ‘live’ database and is updated real-time with Deal information
• Database contains more than 250,000 Deal records across all industries

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
• Every year over 48,000 Deals are added to the database
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executives
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• Five year archive of key companies across eight sectors; complete eight year archive of
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• What we offer
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research;
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– track over 14,000 sources every day.
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– detailed deal information with over 50 fields covering all of the key information required
to understand a deal comprehensively;
– detailed advisory information, financial information, deal multiple, deal rationale, and
information related to business operations in addition to basic fields;
– Value addition through a wide network of contacts with top advisors, law firms,
investment banks, and industry experts.

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APPENDIX
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APPENDIX

Deal Definition and Methodology

Deal type definition

Merger

A deal will be classified as Merger when two or more companies combine to form one company.
An amalgamation in the nature of merger is an amalgamation which satisfies all the following
conditions:

 All the assets and liabilities of the transferor company become, after amalgamation, the
assets and liabilities of the transferee company.

 Shareholders holding not less than 90% of the face value of the equity shares of the
transferor company (other than the equity shares already held therein, immediately before
the amalgamation, by the transferee company or its subsidiaries or their nominees) become
equity shareholders of the transferee company by virtue of amalgamation.

 The consideration for the amalgamation receivable by those equity shareholders of the
transferor company who agree to become equity shareholders of the transferee company is
discharged by the transferee company wholly by the issue of equity shares in the transferee
company, except that cash may be paid in respect of any fractional shares.

 The business of the transferor company is intended to be carried on, after the amalgamation,
by the transferee company.

 No adjustment is intended to be made to the book values of the assets and liabilities of the
transferor company when they are incorporated in the financial statements of the transferee

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
company except to ensure uniformity of accounting policies.

Acquisition

Transactions where a company acquires equity stake in another company. The following are the
different sub-categories under acquisition:

 Minority acquisition: The acquisition of less than 50% equity stake in the target

 Majority acquisition: The acquisition of 50% or more than 50% and less than 100% equity
stake in the target

 100% acquisition: The acquisition of all of the issued capital or 100% of the issued share
capital of the target

 Asset Purchase: The acquisition of a business unit or an asset which is a not a legal entity

Private equity

Private equity transactions capture equity investment / buyout by a private equity (PE) firm. The
following are the different sub-categories under private equity:

 Institutional buyout: PE firm or a group of PE firms acquiring a company from non-PE firms
or another company

 Secondary buyout: PE firm or a group of PE firms acquiring a company from a PE firm

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APPENDIX
 Management buyout (MBO): The management of the target acquires the target with the
backing of a PE firm will back the management in the buyout by providing the necessary
funds

 Management buy-in (MBI): A manager or a management team from outside the target
company (target) raises the necessary finance, buys the target and becomes the target's
new management. The necessary financing is provided by private equity firms.

 Buy-In Management buyout (BIMBO): A BIMBO is a combination of MBO and MBI, where
an external group of managers buy into the business and joins forces with the internal
management team

 Going Private: A public listed company being acquired by PE firms or with the management
and is de-listed form the stock exchange on which it was listed

 Exit: PE firm selling its stake in a portfolio company

Private placement

A private placement is a direct private offering of securities by the issuer to a limited number of
investors. Private placement is a primary market transaction.

Venture financing

Investments made in a start-up or young company by a venture capital or private equity firm in the
primary market (i.e. the target company is issuing new shares and receiving the proceeds directly).
The following are the different sub-categories under venture financing:

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Seed: Financing provided for companies which have still not started marketing their product
or services. The purpose of such funding will generally be to assess and develop an initial
business concept

 Start-up: Financing provided to companies for developing their product/service and to

purchase the necessary assets for their production/operation

 Growth/Expansion: Financing provided for companies to increase their sales, marketing, and
production operations, which have developed and started marketing their products

 Late stage: Financing provided for companies which have already established themselves in
the market and are looking for expanding their production capacities

 Exit: This node is assigned when a venture capital is selling its stake in a portfolio company

Initial Public Offering

 Initial public offering (IPO) occurs when a company first sells its shares to the public. The
following are the different stages under initial public offering:

 Filing: When a company announces its plans to go for an IPO or files the prospectus with the
concerned regulator about the IPO

 Pricing: When the company fixes the issue price for its offering

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APPENDIX
 Secondary offering: When a public listed company’s existing shareholders are offering their
shares to general public or a public listed company itself is making a follow-on public offering

 Withdrawn: When the company withdraws its IPO

 Postponed: When the company postpones its IPO

Partnership

A partnership is the relationship existing between two or more entities that join to carry on a trade or
business. The following are the different sub-categories under partnership:

 Joint Venture (JV): Two or more companies forming a new entity to undertake an activity

 Co-marketing: Two or more companies coming together to collaborate either for product
development, distribution, or for providing services. In a broader sense any alliance related
to products and / or services where products or service of one company are marketed jointly
with product or services of another company is tagged as co-marketing alliance. Agreements
with a distribution company are not considered as Co-Marketing.

 Affinity marketing: An agreement by which one company is getting access to the customer
base of another for selling its products and the company which is providing access to its
customer base is not involved in the product/service development or any other obligations
relating to such product/service

 Licensing agreement: An agreement in which one party gives the rights to another party to
use its technology, intellectual property, and brands. Financial Deals does not capture
licensing deal related to software.

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
Deal status details

Financial Deals captures deal status according to following stages:

 Rumor: Neither of the parties involved in the transaction announces the deal but has been
reported by media/market sources
 Announced: Either party involved in the transaction announces the deal
 Completed: Involved parties complete the transaction
 Terminated: Involved parties do not intend to complete the earlier announced transaction
and either terminates the agreement or withdraws the bid
 Dead rumor: Rumor denied by either of the parties involved in the transaction

Deal value

Deal value is the consideration paid by the acquirer for acquiring the target.

Financial Deals uses a deal value estimation model (for cases where deal value is not available
through secondary and primary sources), which is based on comparables. The estimation model
analyzes deal values based on market capitalization of the target company on the day prior to the
announcement. In addition, it also includes approximation derived through inputs from advisors
involved in the deal, approximate enterprise value, gross consideration and share price and number
of shares.

All deals values which are mentioned as approximate consideration are tagged as estimated values.

Deal value criteria for filtering deals

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APPENDIX

For M&A, private equity, IPO and private placement, FD focuses on transactions where deal value is
more than or equal to $5 million. For venture investment and partnership, FD captures all deals.

Deal payment details

Deal payment is captured in the following fields:

Payment type: Payment type indicates the mode by which the purchase consideration has been
paid to the vendor. It includes the following sub-categories:

 Cash: It indicates the amount paid in cash (either in %age or absolute value) by the acquirer

 Debt: It indicates the amount of debt (either in %age or absolute value) of the target
assumed by the acquirer

 Shares: It indicates the amount of shares (either in %age or absolute value) issued by the
acquirer

 Quantity type: It indicates the consideration by payment mode in terms of value and
percentage

% acquired: % acquired indicates the stock acquired in percentage terms

Share price paid: Price per share offered by the acquirer to the target

Debt-related fields
Below is the list of fields captured:

Debt provider: Field ‘provider type’ indicates the type of debt provider. It includes the following sub-
categories:

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
 Lead: Represents the lead debt provide
 Syndicate: Represents group of lenders that are collectively lending or offering the debt to
the acquirers

Debt amount: Amount of debt raised by the acquirer to finance the acquisition

Debt category: It represents the nature of the debt that has been used by the acquirer in financing
the acquisition. It includes the following categories:

 Bank facilities: These are general loans provided by banks to companies.

 Senior: Debt that has priority for repayment in liquidation.

 Mezzanine: Debt that incorporates equity-based options such as warrants with a lower-
priority debt. Mezzanine debt is often used to finance acquisitions and buyouts, where it can
be used to prioritize new owners ahead of existing owners in the event of bankruptcy.

 Second lien: Debts that are subordinate to the rights of other, more senior debts issued
against the same collateral, or a portion of the same collateral. If a borrower defaults, second
lien debts stand behind higher lien debts in terms of rights to collect proceeds from the
debt's underlying collateral.

 Other debt: Any other debt facility other than the above mentioned debt categories.

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APPENDIX

Securities issued to finance deal

Below is a list of category and sub-category of securities issued by the acquirer, captured in FD:

Capital increase type: It is the type of debt or equity securities issued by the acquirer to raise the
necessary funds to finance the transaction. It includes the following options:

 Converted debt: Converted debt is a debt security which can be exchanged for a specified
amount of another, related security, usually shares of stock in the issuing company, at the
option of the issuer and/or the holder

 Convertible bond: A convertible bond is a type of debt instrument that can be converted
into shares of stock in the issuing company, usually at some pre-announced ratio

 Convertible loan: A convertible loan is a loan issued by companies that can be converted
into ordinary shares or preference shares at a given price at a future date

 Open offer: Indicates the manner in which the company raised money by offering its shares
to the public (public offering)

 Placing: General term to describe the process of raising money via the issue of new shares

 Private placing: Private placing is a process of raising money by the issue of new shares to
institutions and private clients rather than to the general public

 Rights issue: Rights issue is the process of raising money by issuing rights to a company's
existing shareholders to buy a proportional number of additional securities at a given price
within a fixed period

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
 Scrip issue: A scrip issue (also called a capitalization issue or a bonus issue) is the issue of
new shares to existing shareholders at no charge, on a pro-rata basis to their existing
shareholdings

 Vendor placing: A method of using shares to fund an acquisition by allotting shares from
the purchaser to the vendor in exchange for shares in the target (or other assets). The
consideration shares are then placed on behalf of the vendor by the purchaser’s bank so
that the vendor receives cash (the proceeds of sale of shares by the purchaser’s bank).

Financial and operational information

Financial Deals captures all the key financial items from income statement, balance sheet including
key ratios and valuation multiples, which help in providing a detailed understanding of the deal. The
financial information is captured for target companies. All the financial fields are presented in local
currency as well as US Dollar. In addition to financial fields, Financial Deals also captures certain
operational parameters. Below is a list of key fields along with their definitions:

Fiscal year end: Refers to the fiscal year (or financial year or accounting reference date), a 12-
month period used for calculating annual (yearly) financial statements. All the financial fields in
MarketLine Financial Deals database are captured according to the fiscal year-end values.

No. of employees: Number of employees at the fiscal year end

Local currency: The currency in which the company is reporting its financial statements

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APPENDIX

Revenue (non banking): Revenue is the amount of money that a company receives from its
activities in a given period, primarily from sales of products and/or services to customers

Revenue (banking): This value is sum of interest income and non interest income

Operating profit: Operating profit is the earnings before deduction of interest payments and income
taxes; also called EBIT (earnings before interest and taxes) or operating income. For banking
companies interest payments are not deducted.

EBITDA: Earnings before interest, taxes, depreciation and amortization

Post tax profit: Post tax profit is the amount of earnings that is available after deducting the taxes,
also known as profit after tax

Operating margin: This value measures the percent of revenues remaining after paying all
operating expenses. It is calculated as annual operating income divided by annual total revenue,
multiplied by 100.

Enterprise value: Enterprise value is calculated by adding a company’s market capitalization,

preferred stock, minority interest, and outstanding debt together and then subtracting out the cash
and cash equivalents found on the balance sheet as on the fiscal year end

Shares issued: Number of shares the company has issued out of its authorized capital

Market capitalization: Market capitalization is calculated by taking the number of outstanding

shares of common stock multiplied by the market price-per-share as on fiscal year end

Outstanding shares: It represents stock currently held by investors, including restricted shares
owned by the company's officers and insiders, as well as those held by the public. It is also defined

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
as the difference between shares in issue and treasury shares as of the fiscal year end.

Net assets: Net assets are the difference between the total asset and liabilities that has to be paid to
third parties. It is also known as net worth

Net assets-share ratio: It is defined as net assets divided by number of shares outstanding

Earning per share: Earnings per share (EPS) is calculated by dividing a company's net income by
the outstanding shares

Price earning ratio (P/E): The P/E ratio (price-to-earnings ratio) of a stock (also called its ‘earnings
multiple’, or simply multiple, P/E, or PE) is a measure of the price paid for a share relative to the
income or profit earned by the company per share. P/E ratio is arrived by dividing share price at the
end of the fiscal year with net income per share.

Deal multiples

Financial Deals captures the following four valuation multiples:

 EV/revenues
 EV/EBIT
 EV/EBITDA
 EV/total assets

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APPENDIX

Advisor information

Financial Deals captures detailed advisor information including financial advisor, legal advisor,
placement agent, and public relation (PR) advisors along with respective executives involved in the
deal. The following are the different types of advisors:

Legal advisor: Legal advisors are those who look into the legal matters of a company for that
particular deal.

Financial advisor: Financial advisors are those who look into the financial matters of a company for
that particular deal. Financial advisor is separated into the following types:

 Financial due diligence: The process of investigation, performed by investors, into the details
of a potential investment, such as examination of operations and management and
verification of material facts

 Accounting: Financial advisor who looks into the accounting matters for a deal

 Tax: Financial advisor who looks into the tax matters for a deal

 Corporate Finance: Financial advisor who looks into the financial decisions of a corporation

 Book runners: Book runner is the managing or lead underwriter who maintains the books of
securities sold for a new issue

 Underwriters: A company or other entity that administers the public issuance and distribution
of securities from a corporation or other issuing body

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019
 Brokers: An individual or firm that charges a fee or commission for executing buy and sell
orders submitted

 Others: All other financial advisors not falling in the above-mentioned categories are tagged
as other

Placement agent: A company that specializes in finding institutional investors who are willing and
able to invest primarily in unregistered securities

Public Relations (PR) advisor: An entity that advises a company or manages its communication
activities with its stakeholders

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APPENDIX

About MarketLine

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 APPENDIX

Bharat Forge Ltd– Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments -2019

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55
Bharat Forge (BHAFOR)

CMP: | 465 Target: | 535 ( 15%) Target Period: 12 months BUY

May 22, 2019

Diversification from CV space to bear fruit...

Bharat Forge (BFL) reported a healthy performance in Q4FY19. Revenues
came in at | 1,669 crore, up 13.8% YoY, with growth being led by exports

Result Update
(up 18.1% YoY to | 963 crore), particularly from the Americas (up 26% YoY Particulars
to | 707 crore). Industrial segment grew 31% YoY to | 708 crore while the Particular Amount
CV segment lagged. EBITDA margins were largely maintained sequentially Market Capitalization | 21649 Crore
at 31.0% amid operating leverage benefits with gross margins down 50 bps Total Debt (FY19P) |3772.8Crore
QoQ. Consequently, reported PAT came in at | 299.5 crore. Cash and Investments (FY19P) |1015.7Crore
EV |22461.8crore
Increasing kit value, newer products & verticals to support! 52 week H/L (|) 799 / 465
Equity capital | 46.6 Crore
BFL is an important player in the CV ancillary space, providing forging Face value |2
components to both domestic and global OEMs. The CV segment accounted
for ~41% of BFL’s total FY19 revenues. Acknowledging its reliance on the
CV space, BFL has consciously attempted to (i) infuse a greater degree of Key Highlights
diversification in its offerings and (ii) to augment kit value i.e. content per  YoY 13.8% revenue growth for
vehicle. The industrial segment (defence & aerospace, agri, infra, railway and Q4FY19, driven largely by exports
(18.1% YoY). EBITDA margins
oil & gas) constituted ~40% of FY19 revenues. It continues to perform well maintained at 31%
in the oil & gas space in particular, with defence & aerospace business seen
as a key future growth driver. Additionally, as per management, BS-VI rollout  Diversification away from CV
would aid the company’s focus on higher wallet share and new products segment and focus on higher wallet
(e.g. increase of ~| 8,000-10,000/unit on account of transmission axles, etc). share to help lend support post

ICICI Securities – Retail Equity Research

FY20E
CV space in late stage up cycle; growth to mellow after FY20E!
 Maintain BUY with target price of
Domestic CV & global CV accounted for 24% & 17% of BFL’s FY19 revenues, | 535
respectively. The Indian CV space has been on an upswing since FY17 amid
heightened manufacturing & infrastructure activity and is expected to peak
out once demand uptick related to pre-buying ahead of BS-VI
implementation is behind us circa Q3FY20E. Similarly, fresh US Class 8 truck
orders have started diminishing (current monthly run-rate of ~14,000 vs. Research Analyst
40,000+ in the past) although existing order backlog provides revenue
Shashank Kanodia, CFA
visibility for forging players like BFL over the next ~6-9 months. Given [Link]@[Link]
slowing domestic & global CV market (BFL expects flattish US Class 8 truck
market in FY20E) and muted prospects for global passenger car segment, Jaimin Desai
[Link]@[Link]
we factor in modest 3.1% sales CAGR for the company in FY19-21E.

Valuation & Outlook

For BFL, we factor in sales, EBITDA, PAT to grow at 3.1%, 4.4%, 7.2% CAGR,
respectively, in FY19P-21E. We believe the company’s diversified product
base and strategy of improving wallet share will support growth prospects
during expected CV down-cycle. We also derive comfort from BFL’s healthy
return ratios and ~8% CFO yield. Valuing the stock at 21x FY21E EPS of |
25.5, we arrive at a target price of | 535 and retain our BUY rating.

Key Financial Summary

Key Financials FY17 FY18 FY19P FY20E FY21E CAGR (FY19P-21E)
Net Sales 6,396.2 8,357.7 10,145.7 10,680.3 10,788.1 3.1%
EBITDA 1,251.1 1,723.0 2,055.6 2,174.5 2,238.7 4.4%
EBITDA Margins (%) 19.6 20.6 20.3 20.4 20.8
Net Profit 697.6 754.0 1,032.6 1,112.1 1,186.1 7.2%
EPS (|) 15.0 16.2 22.2 23.9 25.5
P/E 31.0 28.7 21.0 19.5 18.3
RoNW (%) 14.5 17.3 19.1 17.9 17.5
RoCE (%) 17.6 12.9 18.2 18.4 18.5

Source: ICICI Direct Research, Company

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 Result Update | Bharat Forge ICICI Direct Research

Exhibit 1: Variance Analysis

Q4FY19 Q4FY19E Q4FY18 YoY (%) Q3FY19 QoQ (%) Comments
Exports and industrial applications segment help deliver
Total Operating Income 1,669 1,705 1,467 13.8 1,693 -1.4
healthy topline growth
Raw Material Expenses 622 657 530 17.3 623 -0.3
Employee Expenses 119 122 112 6.9 122 -2.5
Manufacturing expenses 411 442 408 0.7 421 -2.5
A 50 bps contraction in gross margins was mitigated by
EBITDA 517 484 418 23.8 526 -1.6
operating leverage benefit, with resulting margin
EBITDA Margin (%) 31.0 28.4 28.5 252 bps 31.1 -7 bps
Depreciation 82.1 95.8 70.5 16.5 90.7 -9.4
Interest 31.5 23.8 30.3 3.8 13.6 131.5
Other Income 50 40 34 46.5 48 4.7
PBT 453.8 404.6 217.9 108.3 469.4 -3.3
Tax 154.3 137.6 117.5 31.2 159.6 -3.3
Reported PAT 299.5 267.0 100.3 198.5 309.8 -3.3 Exceptional loss to the tune of | 133 crore in base quarter
Key Metrics
Domestic revenues 658 680 619 6.3 674 -2.4
Export revenues 963 985 815 18.1 976 -1.3 Revenue from Americas increased 26% YoY
Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

FY20E FY21E
(| Crore) Old New % Change Introduced Comments
We soften our revenue estimates courtesy continued pain on the domestic
Revenue 7,221 6,873 -4.8 7,057 and global CV front and muted management commentary. We introduce
FY21E numbers
EBITDA 2,130 2,015 -5.4 2,112
EBITDA Margin (%) 29.5 29.3 -19 bps 29.9 Broadly maintain margin expectations
PAT 1,193 1,129 -5.3 1,197
EPS (|) 25.6 24.3 -5.3 25.7
Source: Company, ICICI Direct Research

Exhibit 3: Assumptions
Current Earlier Introduced Comments
(| crore) FY18 FY19P FY20E FY20E FY21E
Domestic Revenues 2,227 2,627 2,895 3,009.0 3,099
Export revenues
Americas ($ mn) 296 369 380 384 373 We factor in slowness in US Class 8 truck business for FY21
Europe (Euro mn) 102 125 127 135 129
Asia Pac ($ mn) 21 18 19 31 21
USD/INR 68.0 70.4 70.0 71.0 70.0
EUR/USD 1.2 1.1 1.1 1.1 1.1
Source: Company, ICICI Direct Research

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Conference Call Highlights

Management outlook/guidance and demand
 Q1FY20E performance is expected to be muted due to concerns in the
domestic CV, global passenger car and oil & gas space. However,
H2FY20E is seen as being strong

 The management expects US Class 8 production for next year to be

broadly around ~330,000 units

 BS-VI implementation would provide opportunity to increase content

per vehicle and for introduction of newer products related to
transmission and aluminium

 Defence segment ramp up is expected to take place in FY21E

 Indian CV business performance was impacted during the quarter on

account of excess capacity created due to revised axle load norms and
capacity constraint. For FY20E, the management is hopeful of outpacing
industry growth

 The company suffered some market share loss due to capacity

constraint and would set up a new press line within two to three months
to address the issue

Sales, costs and margins

 Of the ~| 800 crore worth orders won in 2017, >50% are yet to fructify
with visibility towards FY21E

 Revenues from defence & aerospace and railways amounted to | 440

crore and | 80 crore, respectively, for FY19

Others
 Total capex envisaged over FY19-20 is at ~| 850 crore for Nellore (high
value chassis components) & Baramati facilities

 Overseas capex would be incurred to the tune of €50 million on

aluminium forging facilities in Europe with full ramp up from FY22E
(combined revenue potential with earlier investment stands at € 100
million)

 BFL is also setting up an aluminium forging plant in the US

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Financial story in charts

Exhibit 4: Top line trend
12000 1,400
1,112 1,186
1,033 1,200 We expect sales to grow at a CAGR of 3.1% over
10000
754 FY19-21E
652 1,000
8000

(| crore)
698
(| crore)

800
6000

10,788
10,680
10,146
600
8,358
7,647

4000
6,396

400
2000 200

0 -
FY16 FY17 FY18 FY19P FY20E FY21E
Total Operating Income PAT
Source: Company, ICICI Direct Research

Exhibit 5: EBITDA and EBITDA margin trend

3000 21 21
21
20 20
2500 21

20 20
2000 We expect steady EBITDA margin profile at BFL to
20
(| crore)

continue, going forward

1500
(%)
19
2,239

19
2,175
2,056

1000
1,723

19
1,421

1,251

500 18
0 18
FY16 FY17 FY18 FY19P FY20E FY21E
EBITDA EBITDA margin
Source: Company, ICICI Direct Research

Exhibit 6: Return ratio trend

20
18.4 17.9
19 19.1
18
17.3 18.4 18.5
17 18.2
17.6
16
(%)

15 14.5
14
13
12 12.9
11
10
FY17 FY18 FY19P FY20E FY21E
RoCE RoE
Source: Company, ICICI Direct Research

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Exhibit 7: Key Valuation metrics (Consolidated)

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 6,396 -16.4 15.0 6.9 31.0 18.2 14.5 12.9
FY18 8,358 30.7 16.2 8.1 28.7 13.7 17.3 18.2
FY19P 10,146 21.4 22.2 37.0 21.0 11.9 19.1 18.4
FY20E 10,680 5.3 23.9 7.7 19.5 10.9 17.9 18.5
FY21E 10,788 1.0 25.5 6.7 18.3 10.3 17.5 19.1
Source: Bloomberg, ICICI Direct Research

Exhibit 8: BFL currently trades at ~18x FY21E EPS

1200

1000

800

600
(|)

400

200

0
Feb-10

Feb-11

Feb-12

Feb-13

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19
May-10

May-13

May-15

May-16

May-18
May-09

May-11

May-12

May-14

May-17

May-19
Aug-09
Nov-09

Aug-10
Nov-10

Aug-11
Nov-11

Aug-12
Nov-12

Aug-13
Nov-13

Aug-14
Nov-14

Aug-15
Nov-15

Aug-16
Nov-16

Aug-17
Nov-17

Aug-18
Nov-18
Price 38x 34x 30x 26x 21x 17x 13x

Source: Company, ICICI Direct Research

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Exhibit 9: Recommendation history vs. consensus

1,000 100.0

800 80.0

600 60.0
(|)

(%)
400 40.0

200 20.0

0 0.0
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Reuters, ICICI Direct Research

Exhibit 10: Top 10 shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 Kalyani Group 31-Mar-19 17.0 78.9 0.00
2 Sundaram Trading & Investment Pvt. Ltd. 31-Mar-19 11.9 55.2 0.00
3 KSL Holding Pvt. Ltd. 31-Mar-19 9.9 46.3 0.00
4 Ajinkya Investment & Trading Co., Pvt. Ltd. 31-Mar-19 4.2 19.6 0.00
5 Reliance Nippon Life Asset Management Limited 30-Apr-19 3.8 17.6 0.31
6 Life Insurance Corporation of India 31-Mar-19 3.5 16.4 0.00
7 Amansa Capital Pte Ltd. 31-Mar-19 2.2 10.2 1.47
8 Hermes Investment Management Ltd. 31-Mar-19 1.8 8.4 0.12
9 The Vanguard Group, Inc. 30-Apr-19 1.5 6.9 -0.07
10 Aditya Birla Sun Life AMC Limited 31-Mar-19 1.4 6.5 0.26
Source: Reuters, ICICI Direct Research

Exhibit 11: Recent activity

Buys Sells
Investor name Value ($mn) Shares (mn) Investor name Value ($mn) Shares (mn)
Amansa Capital Pte Ltd. +10.90M +1.47M Invesco Hong Kong Limited -21.69M -2.93M
AGF Investments Inc. +4.16M +0.57M Norges Bank Investment Management (NBIM) -6.94M -0.95M
Franklin Templeton Asset Management (India) Pvt. Ltd. +3.39M +0.50M Carnegie Fonder AB -5.58M -0.76M
Westwood International Advisors, Inc. +3.05M +0.41M Kotak Mahindra Asset Management Company Ltd. -5.25M -0.71M
Reliance Nippon Life Asset Management Limited +2.11M +0.31M Columbia Threadneedle Investments (US) -2.65M -0.39M
Source: Reuters, ICICI Direct Research

Exhibit 12: Shareholding pattern

(in %) Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
Promoter 45.8 45.8 45.8 45.8 45.8
FII 21.4 20.2 20.2 19.3 19.3
DII 12.7 12.9 12.2 12.5 12.9
Others 20.2 21.2 21.9 22.5 22.0
Source: Company, ICICI Direct Research

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Financial Summary

Exhibit 13: Profit and loss statement | crore Exhibit 14: Cash flow statement | crore
(Year-end March) FY18 FY19P FY20E FY21E (Year-end March) FY18 FY19P FY20E FY21E
Total operating Income 8358 10146 10680 10788 Profit after Tax 754 1033 1112 1186
Growth (%) 30.7 21.4 5.3 1.0 Add: Depreciation 467 521 577 593
Raw Material Expenses 3,281 4,214 4,486 4,531 (Inc)/dec in Current Assets -832 -630 -571 -51
Employee Expenses 1,089 1,246 1,388 1,510 Inc/(dec) in CL and Provisions 225 -155 132 22
Other expenses 2,264 2,630 2,632 2,508 CF from operating activities 720 896 1368 1854
Total Operating Expenditure 6,635 8,090 8,506 8,549 (Inc)/dec in Investments 439 -156 -200 -400
EBITDA 1723 2056 2175 2239 (Inc)/dec in Fixed Assets -580 -1,098 -250 -250
Growth (%) 37.7 19.3 5.8 3.0 Others -680 -70 -82 -56
Depreciation 467 521 577 593 CF from investing activities -821 -1324 -532 -706
Interest 107 127 118 104 Issue/(Buy back) of Equity 0 0 0 0
Other Income 142 203 226 274 Inc/(dec) in loan funds 67 552 -400 -400
PBT 1292 1610 1706 1815 Dividend paid & dividend tax -504 -280 -308 -616
Others 0 0 0 0 Inc/(dec) in Sec. premium 0 0 0 0
Total Tax 442 566 585 623 Others 506 328 -118 -104
PAT 754 1033 1112 1186 CF from financing activities 68 600 -826 -1120
Growth (%) 8.1 37.0 7.7 6.7 Net Cash flow -32 171 10 28
EPS (|) 16 22 24 25 Opening Cash 336 304 475 486
Source: Company, ICICI Direct Research Closing Cash 304 475 486 513
Source: Company, ICICI Direct Research

Exhibit 15: Balance Sheet | crore Exhibit 16: Key ratios

(Year-end March) FY18 FY19P FY20E FY21E (Year-end March) FY18 FY19P FY20E FY21E
Liabilities Per share data (|)
Equity Capital 93.1 93.1 93.1 93.1 EPS 16.2 22.2 23.9 25.5
Reserve and Surplus 4,615 5,313 6,117 6,687 Cash EPS 26.2 33.4 36.3 38.2
Total Shareholders funds 4708 5406 6210 6780 BV 101.1 116.1 133.4 145.6
Total Debt 2,711 3,773 3,373 2,973 DPS 10.8 6.0 6.6 13.2
Deferred Tax Liability 254 270 270 270 Cash Per Share 6.5 10.2 10.4 11.0
Minority Interest / Others 201 179 179 179 Operating Ratios
Total Liabilities 7874 9628 10032 10202 EBITDA Margin (%) 20.6 20.3 20.4 20.8
Assets PBT / Net sales (%) 15.0 15.1 15.0 15.3
Gross Block 8,026 8,637 9,387 9,787 PAT Margin (%) 10.9 9.0 10.2 10.4
Less: Acc Depreciation 4,527 5,047 5,624 6,217 Inventory days 59.4 66.4 70.0 70.0
Net Block 3,499 3,589 3,763 3,569 Debtor days 84.6 77.3 85.0 85.0
Capital WIP 344 831 331 181 Creditor days 57.9 49.2 50.0 50.0
Total Fixed Assets 3843 4420 4093 3750 Return Ratios (%)
Investments 1,528 1,559 1,809 2,259 RoE 18.2 18.4 18.5 19.1
Inventory 1,360 1,845 2,048 2,069 RoCE 17.3 19.1 17.9 17.5
Debtors 1,937 2,148 2,487 2,512 RoIC 19.9 21.7 20.6 21.6
Loans and Advances 43 3 3 3 Valuation Ratios (x)
Other Current Assets 553 528 556 561 P/E 26.6 21.0 19.5 18.3
Cash 304 475 486 513 EV / EBITDA 13.7 11.9 10.9 10.3
Total Current Assets 4,197 4,999 5,580 5,659 EV / Net Sales 2.8 2.4 2.2 2.1
Creditors 1,327 1,366 1,463 1,478 Market Cap / Sales 2.6 2.1 2.0 2.0
Provisions 63 73 78 78 Price to Book Value 4.6 4.0 3.5 3.2
Other Current Liabilities 779 575 606 612 Solvency Ratios
Total Current Liabilities 2,169 2,014 2,147 2,168 Debt/EBITDA 1.6 1.8 1.6 1.3
Net Current Assets 2028 2984 3433 3491 Debt / Equity 0.6 0.7 0.5 0.4
Other non-current assets 475 665 696 703 Current Ratio 1.8 2.2 2.4 2.4
Application of Funds 7874 9628 10032 10202 Quick Ratio 1.2 1.3 1.4 1.4
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

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Exhibit 17: ICICI Direct Research coverage universe (Auto & Auto Ancillary)
Sector / Company CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
(|) TP(|) Rating (| Cr) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E
Amara Raja (AMARAJ) 616 590 Reduce 10524 27.6 28.3 30.0 22.8 22.3 21.0 12.0 11.0 10.2 23.3 21.2 20.2 16.0 14.5 13.9
Apollo Tyre (APOTYR) 183 180 Hold 10480 12.7 11.9 15.3 14.9 15.8 12.3 7.5 7.5 7.3 7.8 8.2 8.0 7.4 8.3 8.2
Ashok Leyland (ASHLEY) 88 85 Hold 25715 5.3 6.4 7.8 16.5 13.7 11.3 7.3 6.6 5.0 28.1 28.2 31.9 21.9 23.2 24.3
Bajaj Auto (BAAUTO) 3047 2800 Reduce 88177 140.6 161.6 165.6 21.7 18.9 18.4 15.2 14.3 13.0 22.9 21.0 20.0 21.5 19.9 19.7
Balkrishna Ind. (BALIND) 776 740 Hold 15004 40.5 40.3 45.9 19.2 19.3 16.9 11.8 10.6 9.0 20.4 18.8 19.5 16.7 18.8 19.5
Bharat Forge (BHAFOR) 465 535 Buy 32590 16.2 22.2 23.9 28.7 21.0 19.5 13.7 11.9 10.9 18.2 18.4 18.5 17.3 19.1 17.9
Bosch (MICO) 16809 17565 Hold 51303 449.1 545.6 622.9 40.4 33.2 29.1 25.1 22.4 18.9 14.4 14.9 15.2 21.4 22.2 22.6
Eicher Motors (EICMOT) 21225 19000 Hold 57858 718.9 808.1 912.5 26.1 23.2 20.5 16.8 16.6 14.3 39.1 32.5 29.6 29.9 24.8 22.8
Escorts (ESCORT) 594 600 Hold 7286 28.1 39.6 43.1 23.5 16.7 15.3 13.1 10.6 8.9 18.8 19.6 19.8 13.5 16.0 15.0
Exide Industries (EXIIND) 209 200 Reduce 17761 8.2 9.1 10.1 27.3 21.7 21.2 14.5 12.7 11.2 19.0 18.4 18.7 12.9 12.9 12.9
Hero Moto (HERHON) 2700 2700 Hold 53912 185.1 169.5 171.2 13.6 14.8 14.7 8.2 9.2 8.7 42.4 37.1 34.2 31.4 26.3 24.1
JK Tyre & Ind (JKIND) 79 100 Buy 1793 2.9 7.8 8.2 27.5 10.3 9.8 9.3 6.3 6.2 7.8 10.9 10.7 3.7 10.3 9.8
Mahindra CIE (MAHAUT) 228 275 Buy 8646 13.2 15.1 17.4 17.1 14.9 12.9 8.9 7.6 6.5 12.4 11.8 12.0 13.2 13.9 14.9
Maruti Suzuki (MARUTI) 6900 5815 Sell 208429 255.6 248.3 256.3 27.0 27.8 26.9 14.5 15.8 14.4 21.1 16.3 15.9 18.5 16.3 15.2
Motherson (MOTSUM) 119 125 Hold 37500 5.1 5.3 7.0 25.7 24.5 18.6 9.3 8.5 6.8 16.3 15.2 18.0 17.4 15.7 18.0
Tata Motors (TELCO) 179 185 Hold 53137 26.8 -84.6 14.5 6.7 NA 12.4 2.6 4.1 3.3 9.1 5.6 10.2 10.3 7.1 13.5
Wabco India (WABTVS) 6185 7000 Hold 11732 143.8 172.2 212.3 46.9 39.2 31.8 30.4 26.2 20.8 17.9 17.8 18.2 25.1 25.7 26.0
Source: Reuters, ICICI Direct Research

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RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock

Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%

Pankaj Pandey Head – Research [Link]@[Link]

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@[Link]

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ANALYST CERTIFICATION
I/We, Shashank Kanodia, CFA, MBA (Capital Markets), and Jaimin Desai, CA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect
our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that
above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies
mentioned in the report.

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Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

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ICICI Securities | Retail Research 10

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 Automobiles May 24, 2019

Bharat Forge
India Research

Bloomberg: BHFC IN
COMPANY UPDATE Reuters: [Link] BUY
Steady Business Outlook – Maintain BUY Recommendation
CMP: Rs460
Target Price: Rs580
During FY19, Bharat Forge Ltd (BFL) reported 22.6% sales growth to Rs65.2bn and 27.5% PAT Previous Target Price Rs604
growth to Rs10.7bn. The company reported 9.9% volume growth during FY19. It domestic sales Upside (%) 26%
grew by 17.9% to Rs26.3bn and contributed 41% to its sales. It exports grew by 25.4% to
Rs37.3bn and contributed 59% to its sales. We foresee steady business outlook for BFL in Stock Information
domestic market and subdued outlook in international market over the next 12 months. To Market Cap. (Rsbn / US$ mn) 214/3,061
factor in current softness in domestic market and benign class 8 truck market growth outlook 52-week High/Low (Rs) 701.7/445.1

in US, we reduce our Sales and PAT estimates by 4.1%/3.8 and 2.5%/3.8% for FY20E and 3m ADV (Rsmn /US$ mn) 729/10

FY21E respectively. Over FY19-21E, we expect, BFL to report 6.2% sales CAGR and 7% PAT Beta 1.0
Sensex/ Nifty 38,811/11,657
CAGR. At CMP of Rs460, BFL stock is quoting at PER of 17.5xFY21E earnings. We retain our
Share outstanding (mn) 466
BUY rating on the stock with a revised price target of Rs580 (PE of 22xFY20E – 25%
discount to its 5 years 12M forward PE). Stock Performance (%)
1M 3M 12M YTD
Domestic business grew by 17.9% YoY (~41% of sales): During FY19 BFL’s Absolute (5.3) (5.9) (32.9) (9.5)
domestic business grew by 17.9%. This growth was supported primarily by Rel. to Sensex (5.9) (13.0) (40.6) (15.9)
industrial segment with sales of Rs10.9bn which grew by 27.9% followed by
Passenger vehicle business which grew by 16.2% to Rs2.4bn. We believe, over the Performance
next 12 months, BFL’s domestic automobile business is expected to witness robust Bharat Forge
demand for MHCV segment in India on account of BS-VI emission norm changes
41,500 750
to be effective from 1st April 2020, resulting in a pre buying. Also its industrial 39,500 650
37,500 550
business is expected to sustain growth on account of the overall pickup in the 35,500 450
infrastructure activity in the country. 33,500 350
31,500 250
29,500 150
Aug-18

Jan-19
Dec-18
Sep-18
Oct-18

Feb-19
Apr-19
May-18

May-19
Jul-18

International business grew by 25.4% YoY (~59% of sales): During FY19 BFL’s
international business grew by 25.4% to Rs37.3bn. This growth was primarily
supported by overseas PV and North American Class 8 orders. We understand, Sensex (LHS) Bharat Forge (RHS)
over the next 6-9 months US Class 8 market and European truck market is expected
to remain soft on account of lower freight demand and slackening industry business Source: Bloomberg
outlook. However North American oil and gas industry is likely to remain stable on
the back of increased oil production and shale gas industry supporting BFL’s
Earnings Revision
industrial business.

Key Financials: (%) FY20E FY21E

Revenue 4.1 3.8
Y/E (Rs mn) FY17 FY18 FY19E FY20E FY21E
EBITDA 1.3 1.1
Net sales 38,647 53,160 65,200 67,315 73,504
PAT 2.5 3.8
EBIDTA 10,726 15,368 19,061 19,747 21,636
Margin (%) 27.8 28.9 29.2 29.3 29.4 Source: Karvy Stock Broking

PAT 5,471 8,405 10,713 11,030 12,274

YoY % (22.1) 53.6 27.5 3.0 11.3
EPS (Rs) 11.7 18.0 23.0 23.7 26.4 Analysts Contact
ROCE (%) 10.8 14.1 15.0 13.6 14.0 Mahesh Bendre
+91 22 6176 0828
ROE (%) 13.9 19.0 21.4 18.8 17.8 [Link]@[Link]
PE (x) 39.2 25.5 20.0 19.4 17.5 Source: Karvy Stock Broking
Source: Karvy Stock Broking

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Volume growth of 9.9% YoY FY19: During the year the Company reported 9.9%
volume growth by delivering 265952 MT forging component compared 242,103
MT in FY18. Management expects domestic CV sector which is currently
witnessing demand softness to become normal in the next few months.

Exhibit 1: Domestic and Exports Revenue Composition

Segments Q4FY19 Q4FY18 Y-o-Y (%) Q3FY19 Q-o-Q (%)
Commercial Vehicles 2,278 3,297 -30.9% 2,695 -15.5%
Industrial 2,873 1,815 58.3% 2,682 7.1%
Passenger Vehicles 672 520 29.2% 616 9.1%
Other Operating 1,237 886 39.6% 1,177 5.1%
Domestic Sales 7,060 6,518 8.3% 7,170 -1.5%

Segments Q4FY19 Q4FY18 YoY (%) Q3FY19 QoQ (%)

Commercial Vehicles 4,061 3,554 14.3% 4,136 -1.8%
Industrial 4,210 3,593 17.2% 4,618 -8.8%
Passenger Vehicles 1,355 1,001 35.4% 1,001 35.4%
Export Sales 9,626 8,148 18.1% 9,755 -1.3%
Source: Company, Karvy Stock Broking

New Orders: During FY19, BFL secured new domestic and export orders worth
$50mn from the Commercial Vehicle and Industrial sector. These orders are
expected to be delivered in FY21. The ramp up of these orders is expected from
H2FY20.

Q4FY19 Result Highlights: During Q4FY19, BFL sales grew by 13.8% YoY to
Rs16.7bn (in line with our estimates of Rs16.8bn) driven by 3.6% volume decline
and an 18.1% increase in average realizations. EBITDA margins expanded by
252bps YoY to 31% on account of lower staff cost and other expenses (our estimates
were 27.8%). PAT increased by 28.2% YoY to Rs3bn, above of our estimates of
Rs2.5bn.

Business Outlook and earning revision upwards: To factor in recent slackness in

US class 8 market and Indian MHCV market, we have revised our sales and PAT
estimates downwards by 4.1%/3.8% and 2.5% / 3.8% for FY20E and FY21E
respectively. We anticipate BFL’s sales momentum to remain soft over the next 2-3
quarters and pick-up is expected post H2FY20. We expect BFL to report 6.2% sales
and 7% PAT CAGR over FY19-21E. The Company is expected to report EPS of
Rs23.7 and Rs26.4 for FY20 and FY21 respectively.

Retain BUY: At CMP of Rs460, BFL stock is quoting at PER of 17.5xFY21E earnings.
We retain our BUY rating on the stock with a revised price target of Rs580 (PE of
22xFY20E – 25% discount to its 5 years 12M forward PE).

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Exhibit 2: Quarterly Performance

Quarterly Results (Rs Mn) Q4FY19 Q4FY18 Y-o-Y % Q3FY19 Q-o-Q %
Net Sales 16,686 14,666 13.8% 16,925 -1.4%
Cost of materials consumed 6,565 5,347 22.8% 6,806 -3.5%
Changes in inventories (349) (50) 601.2% (572) -38.9%
Staff Cost 1,192 1,115 6.9% 1,223 -2.5%
Other expenditure 4,105 4,076 0.7% 4,210 -2.5%
Total Expenditure 11,513 10,489 9.8% 11,667 -1.3%
EBITDA 5,173 4,177 23.8% 5,258 -1.6%
Depreciation 821 705 16.5% 907 -9.4%
EBIT 4,351 3,472 25.3% 4,352 0.0%
Interest 315 303 3.8% 136 132.3%
Other Income 501 342 46.4% 478 4.7%
PBT 4,538 3,511 29.2% 4,695 -3.3%
Tax 1,543 1,175 31.2% 1,596 -3.4%
PAT 2,995 2,335 28.2% 3,098 -3.3%
Margins (%) Q4FY19 Q4FY18 Y-o-Y(bps) Q3FY19 Q-o-Q(bps)
Gross margins 62.7% 63.9% (113) 63.2% (42)
EBITDA 31.0% 28.5% 252 31.1% (7)
PAT 17.9% 15.9% 203 18.3% (36)
Tax Rate 34.0% 33.5% 51 34.0% (1)
Shipment Tonnage 62,690 65,050 -3.6% 66,764 -6.1%
Realization 2,66,167 2,25,459 18.1% 2,53,508 5.0%
Source: Company, Karvy Stock Broking

Exhibit 3: Revision in Estimates

Old (Rs Mn) FY20E FY21E
Sales 70,180 76,418
EBITDA 20,016 21,871
Margins (%) 28.5% 28.6%
PAT 11,316 12,758
EPS (Rs) 24.3 27.4
New Estimates (Rs Mn) FY20E FY21E
Sales 67,315 73,504
EBITDA 19,747 21,636
Margins (%) 29.3% 29.4%
PAT 11,030 12,274
EPS (Rs) 23.7 26.4
Variance (%) FY20E FY21E
Sales -4.1% -3.8%
EBITDA -1.3% -1.1%
Margins (bps) 81 81
PAT -2.5% -3.8%
EPS -2.5% -3.8%
Source: Company, Karvy Stock Broking

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Q4FY19 Key Con-call Takeaways –
 The company plans to incur capex of Rs8.5bn in FY19-21.
 BFL also plans to incur overseas Capex for the Aluminum Forging line in CDP
plant of ~Rs30mn and another ~Rs55mn for the Eastern part of Germany in FY20.
The company expects Rs100mn revenue generation through these plants.
 BFL has invested £10 mn in Tevva and Rs300mn in Tork till date. Going forward
the company also plans to invest another Rs £3 - £5 mn in Tevva.
 BFL is also looking for new opportunities in the component space for electronics
and embedded systems.
 The company has added new press lines in a) Baramati for new forging and
machining b) Nellore for light weighting capacity which is largely into Chassis
components.
 The Nellore facility is expected to commence in the coming 3-4 months.
 The company anticipates Q1FY20 to remain subdued and growth momentum to
pick up during Q3FY20 and Q4FY20 and the company also has strong visibility for
Aluminum forging components.

Financials
Exhibit 4: Financials
Y/E Mar (Rs mn) FY17 FY18 FY19E FY20E FY21E
Net Sales 38,647 53,160 65,200 67,315 73,504
YoY (%) (10.8) 37.6 22.6 3.2 9.2
Raw Material Cost 13,205 18,870 24,357 25,080 27,312
Employee Cost 3,759 4,359 4,863 5,021 5,482
SGA cost 10,956 14,563 16,919 17,468 19,074
Total expenses 27,921 37,792 46,139 47,568 51,869
EBIDTA 10,726 15,368 19,061 19,747 21,636
Margins (%) 27.8 28.9 29.2 29.3 29.4
Depreciation 2,949 3,068 3,466 3,775 4,128
EBIT 7,777 12,300 15,595 15,971 17,508
Interest 728 848 1,024 1,117 917
Other Income 995 1,187 1,660 1,856 2,004
PBT 8,045 12,639 16,231 16,711 18,596
(-) Tax 2,574 4,234 5,518 5,681 6,322
Tax/ PBT 32.0 33.5 34.0 34.0 34.0
PAT 5,471 8,405 10,713 11,030 12,274
YoY (%) (22.1) 53.6 27.5 3.0 11.3
Source: Company, Karvy Stock Broking

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Exhibit 5: Balance sheet
Y/E Mar (Rs mn) FY17 FY18 FY19E FY20E FY21E
Equity Capital 931 931 931 931 931
Reserves 41,388 45,212 53,051 62,621 73,270
Net worth 42,319 46,143 53,982 63,552 74,201
Loans 16,980 20,764 30,401 25,401 20,401
Def Tax Liability 2772 2545 2702 2702 2702
Total Liabilities 62,072 69,451 87,086 91,655 97,304
Net block 23,733 25,276 26,339 28,563 30,436
CWIP 3,743 3,024 7,126 7,126 7,126
Investments 17,721 21,854 22,729 22,729 22,729
Inventories 4,265 5,381 7,604 9,593 10,596
Debtors 13,799 18,142 22,584 21,023 22,956
Cash 2,782 1,877 3,698 6,932 8,169
Other Current Assets 10431 7869 9068 9362 10223
Loans and Advances 296 238 243 251 274
Current Assets 31,573 33,505 43,197 47,161 52,218
Current Liabilities 13,947 13,436 11,613 13,209 14,424
Provisions 751 773 692 715 780
Net Current Assets 16,875 19,297 30,892 33,237 37,014
Total Assets 62,072 69,451 87,086 91,655 97,304
Source: Company, Karvy Stock Broking

Exhibit 6: Cash Flow Statement

Y/E Mar (Rs mn) FY17 FY18 FY19E FY20E FY21E
Net profit 5,851 7,073 10,713 11,030 12,274
Depreciation 2,949 3,068 3,466 3,775 4,128
Deferred tax -26 72 167 0 0
Change in working cap -3,706 -3,327 -9,773 889 -2,540
Cash from Operations 5,067 6,885 4,573 15,694 13,861
Capex -5,039 -4,192 -8,631 -6,000 -6,000
Investments -3,423 -4,133 -875 0 0
Cash from Investments -8,462 -8,324 -9,506 -6,000 -6,000
Free Cash Flow 28 2,693 -4,058 9,694 7,861
Dividend -841 -851 -1,418 -1,460 -1,625
Fresh equity 905 -2,398 -1,465 0 0
Debt 2,366 3,784 9,638 -5,000 -5,000
Cash from Financing 2,430 534 6,754 -6,460 -6,625
Net change in cash -965 -905 1,822 3,234 1,237
Opening cash 3,747 2,782 1,877 3,698 6,932
Closing cash 2,782 1,877 3,698 6,932 8,169
Source: Company, Karvy Stock Broking

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Exhibit 7: Ratios
Key Ratios FY17 FY18 FY19E FY20E FY21E
EPS (Rs) 11.7 18.0 23.0 23.7 26.4
Book Value (Rs) 90.9 99.1 115.9 136.5 159.4
DPS (Rs) 1.5 1.5 2.5 2.6 2.9
P/E (x) 39.2 25.5 20.0 19.4 17.5
EV/EBDITA (x) 21.3 15.2 12.6 11.8 10.5
P/B (x) 5.1 4.6 4.0 3.4 2.9
Div Yield (%) 0.3% 0.3% 0.5% 0.6% 0.6%
ROCE (%) 10.8 14.1 15.0 13.6 14.0
ROE (%) 13.9 19.0 21.4 18.8 17.8
Debt-Equity (x) 0.4 0.4 0.6 0.4 0.3
Current Ratio (x) 2.1 2.4 3.5 3.4 3.4
Gross Asset Turnover (x) 0.8 1.0 1.1 1.0 1.0
Working Capital Days 116 108 125 145 137
W/C % of sales (%) 36% 33% 42% 39% 39%
Source: Company, Karvy Stock Broking

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Stock Ratings Absolute Returns

Buy : > 15%
Hold : 5-15%
Sell : < 5%

For further enquiries please contact:

research@[Link]
Tel: +91-22-61491500

Disclosures Appendix

Analyst certification
The following analyst(s), Mahesh Bendre, who is (are) primarily responsible for this report and whose name(s) is/are
mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about
the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or
indirectly related to the specific recommendation(s) or views contained in this research report.

Disclaimer
Karvy Stock Broking Limited [KSBL]is registered as a research analyst with SEBI (Registration No INH200003265
).KSBLis also a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial
products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and
Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter,
Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty
services, data management, data analytics, market research, solar power, film distribution and production, profiling
and related services. Therefore associates of KSBL are likely to have business relations with most of the companies
whose securities are traded on the exchange platform. The information and views presented in this report are
prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on
information obtained from public sources , the respective corporate under coverage and sources believed to be
reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report
and information contained herein is strictly confidential and meant solely for the selected recipient and may not be
altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or
reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information
herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may
be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on
investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and
information herein is solely for informational purpose and shall not be used or considered as an offer document or
solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all
the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat
recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal,
accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your
specific circumstances. This material is for personal information and we are not responsible for any loss incurred
based upon it. The investments discussed or recommended in this report may not be suitable for all investors.
Investors must make their own investment decisions based on their specific investment objectives and financial
position and using such independent advice, as they believe necessary. While acting upon any information or
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accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to
see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past
performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and
may be subject to change without notice. Actual results may differ materially from those set forth in projections.

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Bharat Forge
 Associates of KSBL might have managed or co-managed public offering of securities for the subject company or
might have been mandated by the subject
Stock company for any other
Ratings assignment
Absolute in the past twelve months.
Returns
Buy : > 15%
 Associates of KSBL might haveHold received compensation
: from the subject company mentioned in the report
5-15%
during the period preceding twelveSell months from the: date of this report for investment banking or merchant
< 5%
banking or brokerage services from the subject company in the past twelve months or for services rendered as
Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and
underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services,
For further
realty services, data processing, profiling enquiries
and related please
services contact:
or in any other capacity.
research@[Link]
 KSBL encourages independence in research report
Tel: preparation and strives to minimize conflict in preparation
+91-22-61491500
of research report.

 Disclosures
Compensation of KSBL’s Research Analyst(s) Appendix
is not based on any specific merchant banking, investment
banking or brokerage service transactions.
Analyst certification

 KSBL
The following analyst(s),
generally Mahesh
prohibits its Bendre,
analysts,who is (are)
persons primarily
reporting toresponsible
analysts andfor their
this report andfrom
relatives whosemaintaining
name(s) is/are
a
mentioned therein,
financial interestcertify
in the (ies) that the
securities views expressed
or derivatives of any herein accurately
companies reflect
that the his cover.
analysts (their) personal view(s) about
the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or
 KSBL related
indirectly to the specific
or its associates recommendation(s)
collectively or views do
or Research Analysts contained
not ownin 1%
thisor
research
more ofreport.
the equity securities of the
Company mentioned in the report as of the last day of the month preceding the publication of the research
report.
Disclaimer
Karvy Stock Broking Limited [KSBL]is registered as a research analyst with SEBI (Registration No INH200003265
 KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the
).KSBLis also a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial
report or third party in connection with preparation of the research report and have no financial interest in the
products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and
subject company mentioned in this report.
Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter,
Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty
 Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of
services, data management, data analytics, market research, solar power, film distribution and production, profiling
publication of this report.
and related services. Therefore associates of KSBL are likely to have business relations with most of the companies
whose securities are traded on the exchange platform. The information and views presented in this report are
 It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/
prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on
are mentioned therein of this report have not received any compensation from the subject company mentioned
information obtained from public sources , the respective corporate under coverage and sources believed to be
in the report in the preceding twelve months.
reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report
and information contained herein is strictly confidential and meant solely for the selected recipient and may not be
 It is confirmed that Mahesh Bendre, Research Analyst did not serve as an officer, director or employee of the
altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or
companies mentioned in the report.
reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information
herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may
 KSBL may have issued other reports that are inconsistent with and reach different conclusion from the
be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on
information presented in this report.
investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and
information herein is solely for informational purpose and shall not be used or considered as an offer document or
 Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies
solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all
mentioned in the report.
the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat
recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal,
 We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting
accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your
Equity Research Analyst activities.
specific circumstances. This material is for personal information and we are not responsible for any loss incurred
based upon it. The investments discussed or recommended in this report may not be suitable for all investors.
Investors must make their own investment decisions based on their specific investment objectives and financial
position and using such independent advice, as they believe necessary. While acting upon any information or
analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL
accepts any liability arising from the use of information
Karvy Stock Brokingand viewsLimited
mentioned in this report. Investors are advised to
see Risk Disclosure Document
Office No. to understand
701, 7thFloor, the risks
Hallmark Business associated
Plaza, before investing
Opp.-Gurunanak in the securities
Hospital, Mumbai 400 051 markets. Past
performance is No.31,
RegdOff :Plot not necessarily a guide
6th Floor, Karvy to futureTowers,
Millennium performance.
FinancialForward-looking statements
District, Nanakramguda, are not
Hyderabad, predictions
500 032, India and
may be subject toKarvy Stock Broking
change withoutResearch is also
notice. available
Actual on: Bloomberg
results - KRVY
may differ <GO>, Thomson
materially Publisher
from those set&forth
Reuters.
in projections.

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