Bharat Forge posted a set of good numbers for Q1FY14 much ahead of all estimates. Sequentially, total revenue has risen 17% at Rs.791 crore. EBITDA was up 28% at Rs.196 crore and margins came in at 24.8% v/s 22.6% (QoQ). This improvement in margins was on the back of strong cost reduction initiatives undertaken in the past two quarters and benefit from increased exports.Net profit was up 81% at Rs.906 crore. Though QoQ, the performance has improved, YoY, it has deteriorated with net profit showing a decline of 14%. Thus we can conclude that the base effect, in terms of Q4 was pretty low and that is what has helped the sequential numbers look so good. Also YoY fall shows the extent of turmoil in the sector. The performance was a balance between domestic as well as exports. In fact exports QoQ rose 28% but YoY, it was down 20%.

In non-automotive sector, during the quarter the company grew 27% and this was driven largely by inventory impact getting over in the export market. It has started supplying finished machined crankshafts for locomotives produced by the Indian Railways, which previously were imported. This is a major breakthrough for the company. Looking ahead, if the company continues to focus more on non automotive sector and continues to witness better export realizations on the back of rupee depreciation, we could see another good quarter ahead.