Balu Forge Industries reports 106.9% PAT growth in Q2 FY25, revenue up by 60.1%

Balu Forge Industries Ltd (BFIL) has announced its financial results for the second quarter of FY25, showcasing a remarkable performance marked by significant growth in profit and revenue. In its board meeting held on October 21, 2024, BFIL revealed that its profit after tax (PAT) surged by an impressive 106.9% year-over-year, reaching ₹481.4 million. Revenue also saw a sharp increase, climbing 60.1% to ₹2,228.7 million for the quarter ending September 30, 2024.

Q2 FY25 Financial Highlights

The precision engineering giant, headquartered in Mumbai, attributed its robust revenue growth to a sustained focus on expanding its client base and rising demand for its specialized engineering products. BFIL’s EBITDA also rose significantly, marking a 116.5% growth, with margins expanding from 21.6% in Q2 FY24 to 29.3% in Q2 FY25. This increase was credited to the company’s larger scale of operations and a higher demand for its heavier products, which offer better margins.

In indirect comments, Mr. Trimaan Chandock, Executive Director of BFIL, indicated that the Indian precision engineering sector is poised for a major growth phase as global companies embrace the China+1 strategy to mitigate supply chain risks. Chandock noted that BFIL is making substantial investments to capitalize on this shift, positioning itself for long-term gains.

Expanding Capabilities and Operations

BFIL is advancing its new manufacturing unit at Belgaum, with the first phase of this project nearing commercialization. The company is confident that the new facility will drive further growth. It anticipates utilizing its expanded capacity fully, with clear visibility of fulfilling orders for the Mercedes-Benz production line and additional capacity expansions already in progress.

Additionally, BFIL has achieved agreements for 72,000 tons of forging capacity, targeting sectors such as railways, defense, and aerospace. The company recently installed its first 7-Axis CNC machine in H1 FY25, demonstrating its commitment to state-of-the-art technology.

Improving Financial Health and Operational Efficiency

Balu Forge Industries has significantly improved its working capital cycle, reducing it from 137 days in H1 FY24 to 106 days in H1 FY25. This optimization was achieved through better inventory management, improved receivables, and streamlined payables. The shorter debtor days have enhanced liquidity, enabling BFIL to maintain a robust cash position and reduce reliance on external financing.

The company’s ability to transform its cash flow, becoming a positive cash flow entity as of H1 FY25, underscores its strategic and operational efficiency. BFIL’s strengthened financial foundation and improved cash flow management have positioned it well for future growth.

Investing in Workforce and R&D

Balu Forge Industries is also set to expand its workforce, with plans to recruit over 1,000 new employees in the coming financial year. A particular focus will be on strengthening its Research & Development teams to drive innovation in new product development and expand its capabilities into emerging sectors like infrastructure under the Indian government’s Viksit Bharat 2047 initiative.

Expert Insight: Positioning for Long-Term Gains

Industry experts acknowledge BFIL’s strategic investments and expansion efforts as critical steps for sustainable growth. Analysts believe that the company’s focus on high-demand sectors like defense, railways, and new energy vehicles, along with its advanced manufacturing capabilities, will further strengthen its market position. As Balu Forge Industries scales its operations, it is expected to gain a competitive edge by leveraging its expanded production capacity and diversified client base.

About Balu Forge Industries Ltd

Founded in 1989, Balu Forge Industries Ltd is a leader in the manufacturing of fully and semi-finished forged components. Its integrated forging and machining infrastructure supports a wide range of products, from light to heavy components, catering to global markets in various industries, including automotive, defense, oil & gas, and marine. With over 80 global distribution networks, the company serves both domestic and international segments.