Q1 Results: Bharat Forge’s Profit Falls On Weak Demand For Commercial Vehicles

Bharat Forge Ltd.’s first-quarter profit slumped on the back of an auto sector slowdown in India that entered its ninth month in July.

The automotive parts maker’s profit fell 28 percent year-on-year to Rs 171.92 crore in the June quarter, it said in an exchange filing. The first quarter, the company said, was also affected by clearing of inventory in the oil & gas sector, adding that demand for commercial vehicles was the weakest.

“There has been a strong consultation process going on with the government, right from suppliers to two-wheeler and four-wheeler original equipment manufacturers, to boost demand in the economy,” Amit Kalyani, deputy managing director of Bharat Forge, told BloombergQuint in an interaction.

Yet, Kalyani sounded optimistic. “Hopefully by Diwali, I believe that in the truck side, inventory overhang should be over this quarter. Next quarter or in the latter part of this quarter, it should be built to sell,” he said. “There should be some positive sentiment created by the system either through liquidity or some infrastructural activity, leading to demand pull.”

Bharat Forge, Kalyani said, already has a large capital expenditure and won’t spend any more for the next two years. It’s also at an advanced stage of trials with some defence orders.

Watch the full interview here: