Bharat Forge’s Q3 FY24 results disappoint, triggering a lower circuit and continued to drop by 14% in a single day amid concerns over future growth
Pune-based forging firm Bharat Forge (NSE: BHARATFORG) faced a substantial setback in its financial performance during the third quarter of fiscal year 2024, triggering a sharp decline in its share price and market capitalization. The company’s challenges were underscored by a 4.6% quarter-on-quarter decline in shipment tonnage, coupled with a 5.7% decrease in export earnings, according to reports from Zee Business.
On Monday’s trading session , Bharat Forge’s shares got locked at its 10 per cent lower circuit limit at Rs 1,183.45 on BSE. With this, the Bharat Forge stock has slipped into negative terrain year-to-date. The slide further continued as the stock plummeted over 14%, closing at Rs 1,130.3 each. Bharat Forge reported consolidated net profit for the quarter ending December at ₹244.52 crore against loss of ₹35.80 Crore in the year ago quarter as repoted in Mint.
Furthermore, concerns about future growth prospects exacerbated the downward trend in Bharat Forge’s stock price. The company anticipates a moderation in growth momentum in both domestic and export markets in the fourth quarter of FY24 and fiscal year 2025, as indicated by reports from multiple sources including Mint and Business Standard. This sentiment was echoed by the management’s acknowledgment of growth concerns across industries, leading to heavy profit booking and about 14% decline in the stock price during intra-day trade.
The management’s acknowledgment of growth moderation underscores the challenges faced by Bharat Forge in navigating a volatile economic landscape, especially amidst uncertainties surrounding global trade dynamics and industry-specific headwinds. Bharat Forge expects a pick-up only after the elections and the reforms that follow, according to Joint Managing Director Amit Kalyani. “We mustn’t always paint a rosy picture in the face of global pains,” he said.
Bharat Forge also announced an interim dividend of ₹2.50 per equity share, which translates into 125% of the face value of ₹2 each of the company.
The share price fell with indications of investors’ concerns reflected in the stock’s higher price-to-earnings ratio. The automotive sector, a key market for Bharat Forge, also experienced a ripple effect from the company’s subdued performance. Market experts predict “a more than 10% decline in Bharat Forge’s shares, attributing the drop to growth concerns for fiscal year 2025. The management’s cautious outlook on market dynamics further fuelled apprehensions among investors, contributing to the downward trajectory of the stock.”
Proxy advisory firms such as Institutional Investors Advisory Services ( IiAS) and Stakeholders Empowerment Services (SES) had recommended that investors vote against the special resolution to appoint Kalyani as the managing director, citing his excessive remuneration.
While efforts to improve operational efficiencies and mitigate challenges are underway, navigating the evolving economic landscape remains a formidable task for Bharat Forge amidst prevailing uncertainties.
