About Balu Forge
Balu Forge Industries Ltd was Incorporated in 1989 & is engaged in the manufacturing of fully finished and semi-finished crankshafts and Forged Components. It has the capability to manufacture components conforming to both New Emission Regulations & the New Energy Vehicles. The company has a fully Integrated Forging & Machining production infrastructure with a large product portfolio ranging from 1 Kg to 900 Kgs. The company has a 80+ global distribution networks and operates through both domestic and export segments. The customers include some of the renowned suppliers and manufacturers of light vehicles, Agricultural equipment, power generation equipment, commercial vehicles, off-highway vehicles, ships, locomotives and many others. The company also caters to the defence, oil & gas, railway, marine amongst other industries.
Ashish Kacholia holds 2.23% equity
The Company is a small-cap with a market capitalisation of about Rs 2000 crore. The free-float is Rs 700 crore. The promoters hold 56.16% of the equity capital while the public holds 42.53%.
Ashish Kacholia holds 21,65,500 equity shares comprising 2.23% of the equity capital. Vanaja Sundar Iyer, Sundar Iyer, also well-known HNI investors, hold 18,00,000 shares comprising 1.85% of the equity capital.
Good financial performance
Balu Forge has been reporting good results. The consolidated net profit jumped about 35 per cent to Rs 10.31 crore for the quarter ended on June 30, 2023, which was Rs 7.66 crore in the year ago period. Its revenue from operations increased about 15 per cent to Rs 69.63 crore during the period under review.
The detailed comparison of the Consolidated Financial Performance — Q1 FY24 v/s Q1 FY23 is as follows
The Revenue from Operations increased by 112.86% and stood at Rs 1,123.85 Mn in Q1 FY24 from Rs 527.97 Mn in Q1 FY23 led by increase in demand for products in operating markets and introduction of heavier crankshafts.
The EBITDA increased to Rs 218.97 Mn in Q1 FY24 from Rs 78.13 Mn in Q1 FY23, margins increased from 14.80% in Q1 FY23 to 19.48% in Q1 FY24 due to better operational efficiency, increased scale of operations and better product mix.
PAT increased by 125.35% and stood at Rs 166.70 Mn in Q1 FY24, compared to Rs 73.97 Mn in Q1 FY23, margins increased from 14.01% in Q1 FY23 to 14.83% in Q1 FY24.
Multibagger gains of 270% YoY
The stock price has been on a multibagger trajectory. On a YoY basis, the stock is up 270%.
The company board of Balu Forge Industries is scheduled to meet on Monday, September 4, 2023 to consider the proposal for fund raising by way of preferential issue/private placement of convertible securities to the promoter and promoter group category of investors, said the exchange filing.
Strong demand for products after acquiring the Mercedes Benz Plant
The requirement for funds suggests that the Company is seeing good demand for its products. The management made it clear that the Company is witnessing robust demand for its products in diverse industries. By effectively utilizing its established product range and successfully introducing new products like the enhanced crankshafts, Balu Forge has not only bolstered its market standing but also enhanced profitability. Additionally, its margins have grown due to improved operational efficiency, expanded scale of activities, and an enhanced product mix.
It is also worth noting that the Company’s capex plan for enhancing machining capacity by ~15,000 tonnes of the Mercedes Benz plant in Belgaum, Karnataka is on track. This enhancement will aid the Company in diversifying its components/products and will increase efficiency and productivity while positioning it a comprehensive solution provider for clients.
So, with a solid foundation and extensive precision engineering and manufacturing capabilities, it can be confidently said that Balu Forge is well-positioned to capitalize on emerging opportunities across commercial vehicles, power generation, defense and railway industries. Its ongoing commitment to innovation and customercentricity will continue to guide it on the path to sustainable revenue growth.
The stock can be bought on dips.