Fundamental Analysis – Balu Forge Industries (BALUFORGE)

About the Stock

Balu Forge Industries Ltd specializes in producing both fully finished and semi-finished forged crankshafts and forged components. The company is equipped to meet the demands of the latest emission regulations and the evolving requirements of new energy vehicles (NEVs). Their advanced manufacturing capabilities ensure that their components not only comply with stringent environmental standards but also cater to the growing market for energy-efficient and environmentally friendly automotive solutions.

Business Model

Established: 1989, renowned for precision engineering and excellence.
Product Range: Forged crankshafts and components for various industries: agriculture, heavy-duty, automotive, generators, oil & gas, refrigeration, off-road & on-road, high performance, locomotive, marine, aerospace.
Global Reach: Strong presence in over 80 countries, serving leading OEMs and aftermarket needs.
Accreditations: ISO/TS16949:2009 certified, distinguishing Balu as a leader in crankshaft manufacturing.
Innovation: Manufacturer of components meeting new emission regulations and energy vehicle standards.
Capacity: Expanded to produce crankshafts up to 2.5 meters, with a monthly output of 30,000 fully finished crankshafts.

Company Valuation
Sector	Engg & Capital Goods
NSE	BALUFORGE
BSE	531112
Market Capitalization	Rs 6,066 Crore (As of August 14, 2024)
Book Value Per Share	Rs 56
Face Value	Rs 10
52 week H/L	599.00 / 155.00
Dividend Yield (%)	—

Shareholding Pattern
Particulars	Dec-23	Mar-24	Jun-24
Foreign Promoters %	0	0	0
Indian Promoters %	56.07	56.07	56.07
DIIs %	1.95	1.88	1.43
FIIs %	8.77	9.71	8.51
Others %	33.21	32.34	33.99

Ratios (Consolidated)
Particulars	Mar 2022	Mar 2023
ROCE %	28.92	26.91
ROE %	25.64	21.91
ROA %	13.11	11.92
Interest coverage ratio	8.47	5.8
D/E	0.3	0.26
P/B	6.22	3.7

Balance Sheet (Consolidated Figures in Rs. Crores.)
(Year-end March)	Mar 2022	Mar 2023
Share Capital	82	83
Reserves	75	114
Borrowings	47	51
Other Liabilities	80	120
Total Liabilities	284	369
Fixed Assets	42	48
Capital WIP	7	7
Investments (Long Term)	0	0
Other Assets	235	314
Total Assets	284	369

Profit & Loss (Consolidated Figures in Rs. Crores.)
(Year-end March)	Mar 2022	Mar 2023	TTM
Sales	286	327	622
Other Income	9	13	11
Expenses	249	277	482
Operating Profit	46	62	152
OPM%	16	19	25
Interest	5	11	14
Depreciation	1	1	3
Profit Before Tax	39	51	137
Tax%	24	23	19
Net Profit	30	39	110
PATM%	10	12	18

Cash Flows (Consolidated Figures in Rs. Crores.)
Particulars	Mar 2022	Mar 2023
Cash from Operating Activity	-58	12
Cash from Investing Activity	-8	-7
Cash from Financing Activity	69	-6
Net Cash Flow	4	-1

Q1FY25 Result Update:

Revenue Growth: BFIL achieved a 55.99% YoY increase, reaching ₹175.31 crores in Q1 FY25, up from ₹112.39 crores in Q1 FY24, driven by client acquisition and high demand for specialized engineering products.
Profit After Tax (PAT): PAT surged 104.96% to ₹34.17 crores from ₹16.67 crores, with PAT margins improving by 466 basis points to 19.49%.
EBITDA Growth: EBITDA rose 97.31%, with margins expanding by 516 basis points to 24.64%, due to increased operations scale and higher demand for higher-margin products.
Dividend Recommendation: The board has proposed a final dividend of 1.50% of the face value per equity share of ₹10 for FY 2023-24.

Quarterly Results (Consolidated Figures in Rs. Crores.)
Particulars	Jun 2023	Sep 2023	Dec 2023	Mar 2024	Jun 2024
Sales	112	139	147	161	175
Other Income	0	4	2	4	1
Expenses	90	109	114	127	132
Operating Profit	22	34	35	39	44
OPM%	20	25	24	24	25
Interest	2	4	4	4	2
Depreciation	0	0	1	1	1
Profit Before Tax	19	30	30	35	42
Tax%	13	22	16	18	18
Net Profit	17	23	25	28	34
PATM%	15	17	17	18	19

Conclusion:

In conclusion, Balu Forge Industries Ltd demonstrates a robust financial and operational performance, showcasing significant growth in revenue, profit, and EBITDA. The company’s ability to adapt to new emission regulations and the increasing demand for energy-efficient vehicles highlights its forward-thinking approach and technological prowess. With a strong global presence and extensive client base, Balu Forge not only excels in manufacturing high-quality forged components but also continues to innovate and expand its capabilities. The recent performance underscores Balu Forge’s solid position in the market and its potential for sustained success and growth.