Balu Forge Industries Ltd (“BFIL”)
Newzdaddy Business Updates
MANAGEMENT COMMENTARY:
Commenting on the performance of Q2 FY24, the management team of BFIL stated:
Balu Forge Industries Ltd reports, financial and business performance for Q2 FY24. In this quarter, Balu Forge Industries Ltd achieved the highest-ever revenue, with a remarkable 130% growth in revenue from operations, increasing from ₹ 605.56 Mn in Q2 FY23 to ₹1,392.25 Mn in Q2 FY24. This growth can be attributed to our expanded product portfolio, including the introduction of heavy-duty crankshafts, as well as increased demand for our products across a wide range of industries, such as automotive, locomotives, defense, oil and gas, railway, marine, prototypes, and more. EBITDA grew by 719% and margins have improved from 6.07% in Q2 FY23 to 21.64% in Q2 FY24 owing to an increase in scale of operations, increased contribution from high-margin products, and the addition of new OEM customers. PAT margins improved from 7.97% in Q2 FY23 to 16.71% in Q2 FY24.
In terms of H1 performance, revenue from operations increased by 127% and stood at ₹2,516.09 Mn in H1 FY24 compared to ₹1,109.52 Mn in H1 FY23. EBITDA increased by 472% from ₹90.89 Mn in H1 FY23 to ₹520.21 Mn in H1 FY24, and margins have improved from 8.19% in H1 FY23 to 20.68% in H1 FY24. PAT increased by 227% and stood at ₹399.40 Mn in H1 FY24 compared to ₹122.23 Mn in H1 FY23, margins have improved from 11.02% in H1 FY23 to 15.87% in H1 FY24 during the same period.
Management Balu Forge Industries Ltd commented, Additionally, we are pleased to announce a notable improvement in our working capital days which has improved from 177 days as of 31st Mar’23 to 135 days as of 30th Sep’ 23. This was primarily attributed to concerted efforts in optimizing our credit control processes while maintaining healthy customer relationships, resulting in a reduction in debtor days.
On the capex front, our plan for enhancing our machining capacity by 14,000 tonnes at our newly acquired 13-acre land in Belgaum, Karnataka has progressed well. The operations from this facility are expected to commence from Q4 FY24, which will enable us to produce heavier and more complex crankshafts having better realizations and margins.
Further, as we evolve, we are witnessing a lot of green shoots in the defense and railway industry. This presents a significant growth opportunity for BFIL, as we continue to expand our footprints in these sectors by leveraging our brand and R&D expertise. Apart from this, we are increasing our reach in newer regions and are actively evaluating the acquisition of plants and machines to support our pursuit of becoming a fully integrated company which will enable us to diversify our product portfolio and bolster our efficiency, productivity, and margins.
Lastly, we are confident that our forthcoming capacity expansion, coupled with favorable macroeconomic trends, will pave the way for us to realize sustainable revenue growth and greater surpluses.
We would like to thank our employees for their efforts and our investors/stakeholders for their continued support and encouragement.”
MANAGEMENT GUIDANCE:
- Revenue is expected to conservatively grow by ~25.0% in FY24 over FY23, led by growth opportunities in various industries like defense, railways, and others
- EBITDA margins are expected to be in the corridor of 0%-23.0% in the upcoming quarter on the back of increasing scale of operations and efficiencies thereon.
BUSINESS UPDATES:
- Raised capital of ₹ 91.80 Cr by issuing fully convertible warrants to the promoters, where each warrant is convertible into an equivalent number of equity shares, each with a face value of ₹10/-
- Raised capital of ₹ 45.90 Cr by issuing 25 lakhs equity shares to Sixteenth Street Asian Gems Fund
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