3QFY2013 Result Update | Auto Ancillary

February 12, 2013

Bharat Forge
Performance Highlights
Y/E March - Standalone (` cr) 3QFY13 3QFY12 Net Sales EBITDA EBITDA margin (%) Adjusted PAT
Source: Company, Angel Research

ACCUMULATE
CMP Target Price
% chg (yoy) 2QFY13 (28.5) (40.5) (424)bp (53.9) 868 194 22.4 92 % chg (qoq) (22.5) (26.8) (124)bp (48.5)

`224 `242
12 Months

Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

673 142 21.2 48

941 239 25.4 103

Auto Ancillary 5,212 1,381 1.0 347/208 49,602 2.0 19,461 5,898 BFRG.BO BHFC@IN

Poor performance on the standalone front: Bharat Forge (BHFC) reported a disappointing performance for 3QFY2013 led by severe weakness in the domestic as well as the export markets which resulted in a 32.4% yoy (19.1% qoq) decline in volumes. Consequently, the standalone revenue posted a significant decline of 28.5% yoy (22.5% qoq) to `673cr. The domestic and export revenues registered a decline of 22.1% (9.3% qoq) and 33.2% yoy (33.5% qoq) respectively on account of a sharp decline in commercial vehicle (CV) sales in India and export markets. Further, slowdown in capital spending in the power, mining and oil and gas sectors also impacted the non auto business. On the operating front, margins contracted 424bp yoy (124bp qoq) to 21.2% which was below our estimates of 23.3% primarily due to lower utilization levels (~50% in domestic operations as against ~65% in 2QFY2013). Hence operating profit and net profit registered a sharp decline of 40.5% (26.8% qoq) and 53.9% yoy (48.5% qoq) respectively. Overseas subsidiaries post loss: BHFCs overseas subsidiaries continued with their poor performance, driven by declining utilization levels (in the range of 45-50%) due to the severe downturn in the heavy truck market in China and demand slowdown in Europe. While the wholly owned subsidiaries (ex China) registered a net loss of `6cr; China operations registered a loss of `12cr. BHFC has shut down its US operations completely and is planning to shift the capacity to India. Outlook and valuation: Guiding for the future, the Management has indicated that the near term outlook remains challenging for the company given the weakness in the domestic markets and subdued market conditions in China and Europe. Further, rationalization of production levels and inventory destocking by the OEMs in the domestic and export markets will also impact the performance going ahead. Consequently, we lower our earnings estimates by 28.8%/19.7% for FY2013E/14E. Nevertheless, we believe that the recent underperformance of the stock (down ~20% over the last two months) factors in most of the concerns stated above. At `224, BHFC is trading at 12x FY2014E earnings. We recommend an Accumulate rating on the stock with a target price of `242.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 42.1 32.0 9.8 16.1

Abs. (%) Sensex Bharat Forge

3m 4.2

1yr 9.7

3yr 20.5 (9.9)

(14.5) (26.5)

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x) FY2011 5,087 54.8 292 (728.5) 15.3 12.5 17.9 2.7 17.1 12.9 1.2 8.3 FY2012 6,279 23.4 410 40.7 15.9 17.6 12.7 2.4 19.8 15.1 1.0 6.6 FY2013E 5,973 (4.9) 311 (24.2) 14.4 13.3 16.8 2.2 13.6 11.0 1.0 7.1 FY2014E 6,707 12.3 433 39.2 15.2 18.6 12.0 1.9 16.9 14.3 0.8 5.6

Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com

Source: Company, Angel Research; Note: CMP of February 11, 2013

Please refer to important disclosures at the end of this report

Bharat Forge | 3QFY2013 Result Update

Exhibit 1: Financial performance (Standalone)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Manufacturing expenses (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT Adjusted PAT Adj. PATM Equity capital (cr) Reported EPS (`) Adjusted EPS (`)
Source: Company, Angel Research

3QFY13 673 290 43.2 63 9.3 133 19.7 44 6.6 530 142 21.2 36 57 19 68 68 10.1 21 30.2 48 48 7.1 46.6 2.0 2.0

3QFY12 941 412 43.8 63 6.6 164 17.4 63 6.7 702 239 25.4 47 56 11 147 147 15.7 44 30.0 103 103 11.0 46.6 4.4 4.4

% chg (yoy) (28.5) (29.6) 0.3 (19.1) (29.7) (24.5) (40.5) (23.1) 2.8 71.8 (53.8) (53.8) (53.5) (53.9) (53.9)

2QFY13 868 378 43.6 64 7.4 162 18.7 69 7.9 673 194 22.4 29 55 26 136 (11) 146 16.8 43 29.7 103 92 10.6 46.6

% chg (qoq) (22.5) (23.2) (2.5) (18.2) (35.2) (21.2) (26.8) (5.5) 25.5 3.5 (24.1) (49.8) (53.4) (52.6) (53.8) (48.5)

9MFY13 2,477 1,073 43.3 196 7.9 467 18.8 169 6.8 1,905 572 23.1 120 169 73 355 (11) 366 14.8 111 30.2 256 245 9.9 46.6

9MFY12 2,709 1,209 44.6 191 7.0 470 17.3 173 6.4 2,043 666 24.6 116 161 52 440 440 16.2 133 30.2 307 307 11.3 46.6 13.2 13.2

% chg (yoy) (8.6) (11.2) 2.4 (0.6) (2.6) (6.8) (14.1) 3.4 4.9 41.4 (19.2) (16.8) (16.9) (16.8) (20.2)

(53.9) (53.9)

4.4 4.0

(53.8) (48.5)

11.0 10.5

(16.8) (20.2)

Exhibit 2: 3QFY2013 Actual vs Angel estimates

Y/E March (` cr) Net Sales EBITDA EBITDA margin (%) Adj. PAT
Source: Company, Angel Research

Actual 673 142 21.2 48

Estimates 871 203 23.3 89

Variation (%) (22.8) (29.9) (213)bp (46.6)

Standalone top-line down 28.5% yoy: For 3QFY2013, the standalone top-line reported a significant decline of 28.5% yoy (22.5% qoq) to `673cr, which was lower than our expectations of `871cr. The performance was impacted on account of the severe weakness in the domestic as well as the export markets which resulted in a volume decline of 32.4% yoy (19.1% qoq) to 37,483MT. The net average realization however, registered a growth of 6.1% yoy as it benefitted from the higher share of machining component (~50% of total sales as against ~45% in 3QFY2012). The domestic and export revenues registered a decline of 22.1% (9.3% qoq) and 33.2% yoy (33.5% qoq) respectively led by a sharp decline in CV sales in India and export markets. Further, slowdown in capital spending in the

February 12, 2013

Bharat Forge | 3QFY2013 Result Update

power, mining and oil and gas sectors also impacted the non auto business. The non-auto business accounted for ~40% of sales and revenues for the business stood at `230cr. The company witnessed significant decline in revenues across all the geographies with the key markets of India, US and Europe experiencing a decline of 24%, 24.2% and 42.4% respectively.

Exhibit 3: Domestic revenue down 22.1% yoy

(` cr) 600 500 400 300 200 100 0 431 478 489 491 497 544 461 Domestic revenue
35.0 34.3

Exhibit 4: Export revenue down 33.2% yoy

(%) 40 30 (`cr) 600 500 400 300 200 100 0 359 358 381 432 464 458 498 467
(33.2)

yoy change (RHS)

Export revenue
80.7 63.5 67.1 57.6 29.2

yoy change (RHS)

(%) 100 80 60

17.4 5.2

15.3

13.8

20 10
(5.6) (13.0) (22.1)

27.7

30.7 8.1

40 20 0 310 (20) (40)

0 (10) (20) (30)

427

387

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13
Others 46 36

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

Source: Company, Angel Research

3QFY13

Source: Company, Angel Research

Exhibit 5: Volume trend

(MT) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 36.4 Volume (tonnage) 31.4 24.2 51,267 52,959 53,740 16.5 55,412 57,242 yoy change (%) (%) 40.0 51,077 (3.6) (13.8) (32.4) 30.0 46,350 37,483 20.0 10.0 0.0 (10.0) (20.0) (30.0) (40.0)

Exhibit 6: Geographical break-up of revenue

(%) 60.0 50.0 40.0 30.0 20.0 10.0 0.0 5 23 20 21 19 4 24 18 3 2123 25 21 24 17 5 3 27 23 15 3 52 India 56 56 US 53 51 Europe 53 47 42

48,116

15.2

11.7

3QFY13
20 13 3

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

Source: Company, Angel Research

3QFY13

Source: Company, Angel Research

EBITDA margin contracts further to 21.2%: On the operating front, margins contracted 424bp yoy (124bp qoq) to 21.2% which was below our estimates of 23.3% primarily due to lower utilization levels. The utilization levels in the domestic operations stood at ~50% as against ~65% in 2QFY2013. The manufacturing expenses and other expenses declined sharply on an absolute basis by 19.1% (18.2% qoq) and 29.7% yoy (35.2% qoq) respectively. However as a percentage of sales, manufacturing expenditure rose significantly by 230bp yoy (100bp qoq) due to sharp decline in top-line. Led by a significant fall in the top-line, the operating profit declined by 40.5% yoy (26.8% qoq) to `142cr.

February 12, 2013

3QFY13

Bharat Forge | 3QFY2013 Result Update

Exhibit 7: EBITDA margin trend

(%) 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 EBITDA margin RM cost/net sales

Exhibit 8: Adj net profit down sharply

(` cr) 140 12.3 10.6 120 44.4 44.2 44.4 44.0 100 80 7.1 Net profit (LHS) 11.4 11.7 11.0 Net profit margin (RHS) 12.8 11.2 10.6 (%) 14.0 12.0 10.0 8.0 6.0 4.0 83 101 97 106 103 126 105 92 48 2.0 0.0

46.9

45.9

46.4

46.7

44.8

24.3

24.0

24.3

24.0

25.4

25.7

25.1

60 22.4 21.2 40 20 0

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

Source: Company, Angel Research

3QFY13

Source: Company, Angel Research

Adjusted net profit down 53.9% yoy: Led by lower-than-expected operating performance, the adjusted net profit registered a decline of 53.9% yoy (48.5% qoq) to `48cr, which was lower than our expectations of `89cr.

Exhibit 9: Subsidiary performance

3QFY2013 WoS Net sales Operating profit EBITDA (%) PBT PAT PATM (%)
Source: Company, Angel Research

3QFY2012 WoS 515 29 5.6 5 1 0.2 China 143 7 4.7 (2) (1) (0.8)

% chg (yoy) WoS (2.2) (10.0) China 18.3 (240.3) -

2QFY2013 WoS 455 17 3.8 (11) (9) (2.0) China 143 7 4.7 (2) (1) (0.8)

% chg (qoq) WoS 10.8 53.2 China 18.3 (240.3) -

China 169 (9) (5.6) (22) (12) (6.8)

504 26 5.2 (6) (6) (1.1)

Overseas subsidiaries post loss: BHFCs overseas subsidiaries continued with their poor performance in 3QFY2013 as well. The wholly owned subsidiaries (WoS) posted a disappointing result with the top-line registering a decline of 2.2% yoy and bottom-line posting a loss of `6cr as against a profit of `1cr in 3QFY2012. The China JV posted a net loss of `12cr during the quarter. The subsidiaries performance continues to be impacted due to the lower utilization levels (in the range of 45-50%) caused by downturn in the heavy truck market in China and decline in demand in Europe. BHFC has shut down its US operations completely and is planning to shift the capacity to India.

February 12, 2013

3QFY13

Bharat Forge | 3QFY2013 Result Update

Conference Call Key highlights

According to the Management, the demand environment in 4QFY2013 is likely to remain subdued as OEMs across the world are rationalizing production levels and focusing on inventory de-stocking. The capacity utilization level in India remains at ~50%; while in Europe and China it stands at ~65% and ~45% respectively. BHFC has initiated a series of measures aimed at controlling costs and productivity improvements; full benefit of which is likely to flow in the coming quarters. The non-auto business accounted for ~40% of the standalone revenues in 3QFY2013. Exports form ~50% of non-auto revenues. The slowdown in construction and mining activities world-wide has impacted export performance of the non-auto business. At the standalone level, the gross debt of the company stands at ~`1,900cr. Cash levels stand at ~`700cr. BHFC has ~`200cr debt at the subsidiary level. The machining-mix for 3QFY2013 stood at ~50% vs ~45% in 3QFY2012. The Management has stated that there is a lack of clarity on how the demand will shape up in the near term. According to the company, the truck production in China has declined by over 50%. Also the construction activity in China is down significantly (operating at levels of ~10% of industry capacity). Due to improved efficiencies and cost rationalization; the break-even level for the domestic operations has been lowered to ~30% levels.

February 12, 2013

Bharat Forge | 3QFY2013 Result Update

Investment arguments
Domestic operations dependent on CV demand: BHFC, being a market leader in the CV space for products such as crankshaft, axle beams and connecting rods, with an ~90% market share, has been able to register robust growth over the last two years. However, with slowdown in the domestic commercial vehicle segment we expect the companys domestic operations to post a slightly subdued growth in FY2013. Turnaround of the overseas subsidiaries and JVs a key to boost consolidated performance: BHFCs international operations posted losses (pre-tax) in FY2010 due to a decline in demand and high operational costs. However, restructuring exercise and operational efficiencies led to a strong turnaround in the Chinese JV (FAW-BF) and other subsidiaries in FY2012. Nonetheless, the subsidiaries are again posting losses as there has been a demand slowdown in China, US and Europe. We believe that revival in demand is the key for the overseas subsidiaries as it will boost the capacity utilization levels, which in turn would lead to higher profitability. Thrust on non-auto business to diversify product portfolio: BHFC intends to increase its non-automotive revenue to 40% (~35% of consolidated revenue in FY2012) by FY2013. To achieve this goal, BHFC has set up an 80MT hammer (40,000 TPA capacity) and a ring rolling (25,000 TPA capacity) facility in Baramati in addition to the existing 60,000 TPA non-auto facility in Mundhwa. We expect BHFC to benefit from new investments by various players in the power, oil and gas and capital goods sectors, leading to a strong demand for non-automotive forgings.

Outlook and valuation

Guiding for the future, the Management has indicated that the near term outlook remains challenging for the company, given the weakness in the domestic markets and subdued market conditions in China and Europe. Further, rationalization of production levels and inventory destocking by the OEMs in the domestic and export markets will also impact the performance going ahead. As a result, we revise our consolidated revenue estimates for FY2013/14 downwards by 11.6%/11.3%. Further, we also lower our operating margin estimates to account for lower utilization levels in the domestic operations and also at the overseas subsidiaries level. Consequently, we lower our earnings estimates by 28.8%/19.7% for FY2013E/14E.

Exhibit 10: Change in estimates

Y/E March (` cr) Net sales OPM (%) EPS (`) Earlier Estimates FY2013E 6,754 15.5 18.7 FY2014E 7,565 15.7 23.1 Revised Estimates FY2013E 5,973 14.4 13.3 FY2014E 6,707 15.2 18.6 % chg FY2013E (11.6) (110)bp (28.8) FY2014E (11.3) (55)bp (19.7)

Source: Company, Angel Research

February 12, 2013

Bharat Forge | 3QFY2013 Result Update

At `224, BHFC is trading at 12x FY2014E earnings. We believe that the recent underperformance of the stock (down ~20% over the last two months) factors in most of the concerns stated above. We recommend an Accumulate rating on the stock with a target price of `242, valuing the stock at 13x FY2014E earnings.

Exhibit 11: Angel vs consensus forecast

Angel estimates FY13E Total op. income (` cr) EPS (`) 5,973 13.3 FY14E 6,707 18.6 Consensus FY13E 6,108 13.7 FY14E 6,791 18.3 Variation (%) FY13E (2.2) (2.8) FY14E (1.2) 1.7

Source: Company, Angel Research

Exhibit 12: One-year forward EV/EBITDA band

(` cr) 25,000 20,000 15,000 10,000 5,000 0 EV (`cr) 5x 10x 15x 20x

Exhibit 13: One-year forward EV/EBITDA chart

(x) 35.0 30.0 25.0 20.0 15.0 10.0 5.0 One-yr forward EV/EBITDA Three-yr average EV/EBITDA

Dec-04

0.0

Jun-06

Mar-07

Aug-08

Apr-04

Nov-07

Feb-10

Sep-05

Oct-10

May-09

Apr-12

Jan-13

Jul-11

Dec-06

Dec-08

Dec-10

Aug-07

Aug-09

Mar-06

Aug-11

Apr-08

Apr-10

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 14: Auto Ancillary Recommendation summary

Company Amara Raja Batteries Automotive Axle Bharat Forge* Bosch India
# ^

Reco. Accumulate Neutral Accumulate Accumulate Accumulate Buy Neutral Buy

CMP (`) 299 363 226 9,023 122 1,420 191 27

Tgt. price (`) 323 242 9,570 131 1,807 35

Upside (%) 8.1 6.9 6.1 6.9 27.3 31.9

P/E (x) FY13E 16.2 12.2 16.8 28.3 20.9 13.9 23.8 8.0 FY14E 13.9 14.8 12.0 22.8 15.6 11.1 18.1 5.3

EV/EBITDA (x) FY13E 10.2 5.8 7.1 17.8 11.2 8.6 9.2 4.2 FY14E 9.1 6.3 5.6 13.9 8.1 6.3 7.5 3.7

RoE (%) FY13E 32.9 17.5 13.6 18.1 15.4 21.0 22.9 7.2 FY14E 29.1 13.2 16.9 18.8 18.2 21.7 24.7 10.1

FY12-14E EPS CAGR (%) 30.8 (19.7) 2.7 8.0 20.2 9.8 56.2 0.1

Exide Industries FAG Bearings# Motherson Sumi* Subros

Source: Company, Angel Research; Note: *Consolidated

February 12, 2013

May-12

Jan-13

Jul-05

Bharat Forge | 3QFY2013 Result Update

Company background
Bharat Forge, a global forging conglomerate, is the largest exporter of automotive components from India and a leading chassis component manufacturer in the world. The company manufactures a wide range of safety and critical components for passenger cars, SUVs, LCVs, MHCVs and tractors through its facilities spread across 11 locations globally - India (4), Germany (3), China (2), U.S. (1) and Sweden (1). BHFC also produces forged and machined components for nonautomotive industries, such as power generation, marine, oil and gas, railways and construction. The automotive industry currently contributes ~75% to the company's consolidated revenue; although through diversification BHFC expects the share of the automotive industry's revenue to fall to 55% by FY2013.

February 12, 2013

Bharat Forge | 3QFY2013 Result Update

Profit and loss statement (Consolidated)

Y/E March (` cr) Total operating income % chg Total expenditure Net raw material costs Other mfg costs Employee expenses Other EBITDA % chg (% of total op. income) Depreciation & amortization EBIT % chg (% of total op. income) Interest and other charges Other income Recurring PBT % chg Extraordinary items PBT (reported) Tax (% of PBT) Minority interest (MI) PAT (reported) ADJ. PAT % chg (% of total op. income) Basic EPS (`) Adj. EPS (`) % chg FY2009 FY2010 FY2011 FY2012 4,711 2.5 4,351 2,307 872 709 463 360 (44.6) 7.6 252 108 (74.5) 2.3 129 124 103 (77.1) (8) 110 69 62.8 (18) 58 66 (78.2) 1.4 2.6 3.0 (78.2) 3,286 (30.3) 3,081 1,578 645 524 334 204 (43.2) 6.2 245 (41) (1.2) 130 89 (82) (17) (65) 12 (18.0) (13) (63) (46) (1.4) (2.8) (2.1) 5,087 54.8 4,309 2,427 911 646 325 777 280.4 15.3 255 522 10.3 153 66 435 (1) 437 140 32.0 7 290 292 5.7 12.5 12.5 6,279 23.4 5,283 2,913 1,193 791 387 996 28.1 15.9 302 694 32.9 11.1 184 93 603 38.6 3 600 180 29.9 7 413 410 40.7 6.5 17.8 17.6 40.7 FY2013E 5,973 (4.9) 5,112 2,807 1,165 759 382 860 (13.7) 14.4 330 530 (23.6) 8.9 173 94 451 (25.1) 451 135 30.0 5 311 311 (24.2) 5.2 13.3 13.3 (24.2) FY2014E 6,707 12.3 5,691 3,119 1,288 855 429 1,016 18.1 15.2 344 672 26.7 10.0 146 102 629 39.2 629 189 30.0 7 433 433 39.2 6.5 18.6 18.6 39.2

February 12, 2013

Bharat Forge | 3QFY2013 Result Update

Balance sheet statement (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity share capital Reserves & surplus Shareholders funds Minority interest Total loans Deferred tax liability Other long term liabilities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross block Less: Acc. depreciation Net Block Capital work-in-progress Investments Long term loans and advances Other noncurrent assets Current assets Cash Loans & advances Other Current liabilities Net current assets Total Assets 4,028 1,560 2,468 322 0 2,532 488 720 1,323 1,208 1,324 4,114 4,135 1,727 2,408 199 274 2,417 598 658 1,162 1,419 998 3,878 4,501 2,038 2,463 201 261 325 37 2,388 396 426 1,565 1,468 920 4,207 4,999 2,358 2,642 524 387 511 71 3,200 672 492 2,036 2,355 845 4,979 5,498 2,688 2,810 275 375 511 71 3,055 667 517 1,871 2,415 640 4,682 5,736 3,032 2,704 287 377 511 71 3,455 739 543 2,173 2,697 758 4,707 45 1,599 1,643 95 2,191 184 4,114 45 1,418 1,463 78 2,253 84 3,878 47 1,906 1,953 154 1,886 132 1 80 4,207 47 2,144 2,190 196 2,419 89 1 85 4,979 47 2,347 2,393 196 1,919 89 1 85 4,682 47 2,671 2,719 196 1,619 89 1 85 4,707 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

February 12, 2013

10

Bharat Forge | 3QFY2013 Result Update

Cash flow statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in working capital Others Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in fixed assets (Inc.)/Dec. in investments Other income Cash Flow from Investing Issue of equity Inc./(Dec.) in loans Dividend paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in cash Opening Cash balances Closing Cash balances FY2009 FY2010 FY2011 110 252 (298) 390 (124) (69) 261 (666) 299 124 (243) 2 536 92 (479) 152 170 318 488 (65) 245 435 28 (89) (12) 542 16 (273) 89 (168) 100 62 26 (453) (265) 109 488 598 437 255 (123) (22) (66) (140) 341 (368) 12 66 (290) (267) (366) 27 354 (252) (201) 598 396 FY2012 FY2013E FY2014E 600 302 350 (277) (93) (180) 703 (821) (126) 93 (854) 67 859 95 (189) 832 275 396 672 451 330 195 (94) (135) 747 (250) 12 94 (144) (500) 108 (608) (5) 672 667 629 344 (52) (102) (189) 630 (250) (2) 102 (150) (300) 108 (408) 72 667 739

February 12, 2013

11

Bharat Forge | 3QFY2013 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Int.) 1.0 4.7 0.8 0.9 6.8 (0.3) 0.6 1.6 3.4 0.6 1.4 3.8 0.4 1.0 3.1 0.2 0.5 4.6 1.3 59 47 66 53 0.8 80 58 124 69 1.2 53 45 95 33 1.3 59 46 127 20 1.1 72 46 128 4 1.2 67 46 128 (0) 2.8 3.0 4.0 (1.0) (1.2) (3.0) 12.9 13.7 17.1 15.1 16.1 19.8 11.0 13.2 13.6 14.3 16.9 16.9 2.3 0.4 1.4 1.2 2.5 0.8 0.1 (1.2) 1.2 1.0 (1.4) 6.9 1.0 (9.6) 10.3 0.7 1.4 10.0 5.0 0.8 13.8 11.1 0.7 1.5 12.0 6.0 0.6 15.7 8.9 0.7 1.4 8.9 5.6 0.5 10.6 10.0 0.7 1.7 11.8 5.8 0.3 13.4 2.6 3.0 14.3 1.0 73.8 (2.8) (2.1) 8.9 1.0 65.7 12.5 12.5 23.5 3.5 83.9 17.6 17.6 30.6 4.0 94.1 13.3 13.3 27.5 4.0 102.8 18.6 18.6 33.4 4.0 116.7 84.9 15.7 3.0 0.4 1.4 19.2 1.7 25.1 3.4 0.5 2.0 32.3 1.7 17.9 9.5 2.7 1.6 1.2 8.3 1.5 12.7 7.3 2.4 1.8 1.0 6.6 1.3 16.8 8.1 2.2 1.8 1.0 7.1 1.3 12.0 6.7 1.9 1.8 0.8 5.6 1.2 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

February 12, 2013

12

Bharat Forge | 3QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Bharat Forge No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 12, 2013

13