1QFY2012 Result Update | Auto Ancillary

August 10, 2011

Bharat Forge
Performance Highlights
Standalone Y/E March (` cr) Net sales EBITDA EBITDA margin (%) Reported PAT
Source: Company, Angel Research

ACCUMULATE
CMP Target Price
1QFY11 630 154 24.5 59 % chg (yoy) 36.1 34.9 (22)bp 63.9 Angel est. 835 193 23.1 88 % diff. 2.7 7.8 116bp 11.1

`285 `325
12 Months

1QFY12 858 208 24.3 97

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

Auto Ancillary 6,637 1.0 413/262 67,091 2 17,131 5,161 BFRG.BO BHFC@IN

Strong standalone performance: Bharat Forge (BFL) registered strong 36.1% yoy (4.4% qoq) growth in its standalone revenue to `858cr, primarily aided by a 67.1% (6.4% qoq) and 17.4% (2.2% qoq) yoy jump in exports and domestic revenue, respectively. EBITDA margin remained stable on a yoy as well as qoq basis at 24.3%, despite a surge in commodity prices. As a result, BFL posted a 63.9% yoy (down 3% qoq) jump in its net profit to `97cr, beating our estimates, owing to better performance at the operating level and higher other income.
Consolidated Y/E March (` cr) Net sales EBITDA EBITDA margin (%) Reported PBT
Source: Company, Angel Research

1QFY12 1,568 248 15.8 153

1QFY11 1,145 184 16.1 95

% chg (yoy) 37.0 35.0 (23)bp 60.4

Angel est. 1,350 220 16.3 135

% diff. 16.2 12.8 (47)bp 13.0

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 42.1 30.6 12.4 14.9

Consolidated performance, better than our expectations: BFL reported better-than-expected 37% yoy (1.5% qoq) growth in its top line to `1,568cr, largely aided by continued improvement in operations at its US and European subsidiaries. EBITDA margin came in marginally below our estimate at 15.8%, down by 23bp yoy and 56bp qoq. However, PBT came in above our expectation, up 60.4% yoy (2.3% qoq), to `153cr, largely aided by improved operating performance. Outlook and valuation: We have revised our revenue and earnings estimates downwards to factor in the likely slowdown in the US and the European markets. Nonetheless, on account of the recent correction in the stock price, we maintain our Accumulate view on the stock. At `285, the stock is trading at 13.2x FY2013E EPS and 6.8x EV/EBITDA on a consolidated basis. Our revised target price works out to `325 (`351), at which levels the stock would trade at 15x P/E and 7.7x EV/EBITDA on FY2013E basis. 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)
Source: Company, Angel Research

Abs. (%) Sensex Bharat Forge

3m (7.5)

1yr (6.0)

3yr 12.9 6.9

(17.9) (17.0)

FY2010 3,286 (30.3) (63) 6.2 (2.8) 4.3 (4.1) (1.0) 2.4 39.2

FY2011 4,999 52.2 290 13.8 12.5 22.8 3.4 17.0 10.8 1.5 11.4

FY2012E 5,907 18.2 419 44.5 14.8 18.0 15.8 2.8 19.2 14.1 1.2 8.1

FY2013E 6,663 12.8 505 20.5 15.0 21.7 13.2 2.4 19.3 16.5 1.0 6.8

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

Please refer to important disclosures at the end of this report

Bharat Forge | 1QFY2012 Result Update

Exhibit 1: Quarterly performance Standalone

Y/E March (` cr) Net sales Consumption of RM (% of sales) Staff costs (% of sales) Manufacturing exp. (% of sales) Other expenses (% of sales) Total expenditure EBITDA EBITDA margin (%) Interest Depreciation Other income PBT (excl. extr. items) Extr. income/(expense) PBT (incl. extr. items) (% of sales) Provision for taxation (% of PBT) Reported PAT PATM (%) Equity capital (cr) EPS (`)
Source: Company, Angel Research

1QFY12 858 385 44.9 59 6.9 147 17.2 58 6.7 649 208 24.3 30 52 15 141 0 141 16.5 44 31.1 97 11.4 46.6 4.2

1QFY11 630 281 44.5 46 7.2 105 16.6 45 7.1 476 154 24.5 30 47 10 88 0 88 13.9 28 32.4 59 9.4 46.6 2.6

% chg 36.1 37.2 29.4 40.6 29.6 36.5 34.9 0.3 10.4 45.2 60.9 60.9 54.7 63.9

FY2011 2,947 1,330 45.1 201 6.8 492 16.7 208 7.0 2,231 716 24.3 121 193 46 448 0 448 15.2 137 30.6 311 10.5 46.6

FY2010 % chg 1,856 822 44.3 144 7.7 316 17.0 137 7.4 1,419 437 23.5 103 164 32 21 9.7 54 155.3 29.7 127 144.5 6.8 44.5 5.7 133.8 18.2 17.5 42.9 57.2 63.9 51.2 55.6 40.2 58.8 61.8

202 121.5 181 147.7

63.9

13.3

Exhibit 2: Segmental performance Standalone

Y/E March (` cr) Segment revenue Steel forging Gen. engg., trading etc. Total segment revenue PBIT from each segment Steel forging Gen. engg., trading etc. Total PBIT (%) Steel forging Gen. engg., trading etc.
Source: Company, Angel Research

1QFY12 1QFY11 % chg FY2011 FY2010 % chg 854 5 859 194 2 196 22.7 36.4 628 4 632 144 144 22.9 17.4 36.0 46.8 36.0 34.9 35.7 5,075 19 5,094 785 4 789 15.5 23.0 3,322 11 3,333 52.8 64.8 52.8

302 159.9 3 65.4 305 159.1 9.1 22.9

1 207.7

August 10, 2011

Bharat Forge | 1QFY2012 Result Update

Top line grows on strong exports performance: BFL reported an in-line 36.1% yoy (4.4% qoq) jump in its standalone revenue to `858cr, driven by a 17.4% yoy (2.2% qoq) jump in domestic revenue and 67.1% yoy (6.4% qoq) jump in exports revenue. The company reported domestic growth despite a sequential decline in CV volumes. Volumes in tonnage terms increased by 24.2% yoy (3.3% qoq) to 52,959MT on account of strong export demand, while average net realisation grew by 9.7% yoy (flat qoq) in 1QFY2012. Strong growth in the CV segment and non-auto segment in Europe and US benefitted the companys exports performance. Exports to Europe and US increased by 32.4% and 107.8% yoy, respectively, in 1QFY2012. The non-auto segments revenue posted strong 51.3% yoy growth to `284cr, driven by ramp-up at new facilities and increasing customer base. New facilities contributed `161.5cr to the top line and grew by 97.9% yoy during the quarter.

Exhibit 3: Domestic revenue up by 17.4%

(` cr) 600 500 400 300 200 100 0 (38.4) 48.5 Domestic revenue 100.3 85.0 59.5 35.0 34.3 yoy change (RHS) (%) 120 100 80 60 40 17.4 20 0 (20) (40) (60)

Exhibit 4: Exports revenue continues to be strong

(`cr) 450 400 350 300 250 200 150 100 50 0 Export revenue 84.2 83.7 59.9 yoy change (RHS) 80.7 63.5 67.1 (%) 100 80 60 40 20 0 (20) (40) (60) (80)

(18.6) (52.0) (56.3)

(17.6)

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11
Others 54 56

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 5: Volume trend

(MT) 60,000 50,000 40,000 30,000 20,000 10,000 0 (50.4) (30.0) 35.5 Volume (tonnage) 113.9 86.7 51.8 36.4 31.4 yoy change (%) (%) 140 120 100 80 60 40 24.2 20 0 (20) (40) (60)

Exhibit 6: Geographical break-up of revenue

(%) 70 60 50 40 30 20 10 0 22 17 1 20 13 1 26 12 1 22 15 1 1816 2 19 16 3 22 20 5 1921 4 24 18 3 60 India 66 US 61 61 64 Europe 62

1QFY12
56

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

Source: Company, Angel Research

1QFY12

Source: Company, Angel Research

Improved operating leverage helps maintain margins: BFLs operating margin remained flat on a yoy and qoq basis to 24.3% during 1QFY2012, despite a surge in raw-material costs (primarily steel prices). The company was able to sustain its margin on account of improvement in operating leverage and reduction in staff costs and other expenditure to the extent of 38bp and 36bp yoy, respectively. Overall, BFL posted 34.9% yoy (4.8% qoq) growth in its operating profit to `208cr.

August 10, 2011

1QFY12

Bharat Forge | 1QFY2012 Result Update

Exhibit 7: EBITDA margin maintained at ~24%

(%) 50 45 40 35 30 25 20 15 10 5 0 EBITDA margin RM cost/net sales (excl. other opr. Inc.)

Exhibit 8: Net profit beats estimates

(` cr) 120 46.4 100 80 60 6.4 7.7 Net profit (LHS) 11.2 Net profit margin (RHS) 12.6 11.7 11.0 9.7 (%) 14 12 10 8 6 4 0.3 2 0

46.3

44.9

45.4

44.9

46.1

47.2

46.9

45.9

9.8

20.9

24.0

23.4

25.2

24.5

24.2

24.3

24.2

24.3

40 20 0

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

Source: Company, Angel Research

Source: Company, Angel Research

Net profit at `97cr, beats estimates: BFL recorded better-than-expected net profit growth of 63.9% yoy (down 3% qoq) to `97cr, led by strong operating performance and improved operating leverage. Higher other income at `15cr (up 45% yoy) also aided net profit growth to a certain extent. Consolidated performance exceeds expectation: On a consolidated basis, BFL reported better-than-expected 37% yoy (1.5% qoq) growth in its top line to `1,568cr, driven largely by strong traction in exports revenue and improvement in its US and European subsidiaries. EBITDA margin came in marginally lower than our estimate at 15.8%, down 23bp yoy (56bp qoq). However, PBT grew by strong 60.4% yoy (2.3% qoq) to `153cr, led by improved operating performance of the subsidiaries.

Exhibit 9: Quarterly performance Consolidated

Y/E March (` cr) Revenue EBITDA EBITDA margin Reported PBT
Source: Company, Angel Research

1QFY12 1,568 248 15.8 153

1QFY11 1,145 184 16.1 95

4QFY11 1,546 253 16.4 149

% yoy chg 37.0 35.0 (23)bp 60.4

1QFY12

% qoq chg 1.5 (2.0) (56)bp 2.3

Exhibit 10: Strong top-line growth of 37% yoy

( ` cr) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Total revenue 66.3 47.3 (15.4) (54.0) yoy growth (RHS) 56.4 50.2 67.3 (%) 80 60 40 37.0 20 0 (20) (40) (63.2) (60) (80)

Exhibit 11: EBITDA margin trend

( ` cr) 300 250 200 150 100 50 0 9.6 13.3 EBITDA 16.6 18.7 16.1 17.5 EBITDA margin (RHS) 18.1 16.4 15.8 (%) 20 18 16 14 12 10 8 6 4 2 0

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

Source: Company, Angel Research

Source: Company, Angel Research

August 10, 2011

1QFY12

Bharat Forge | 1QFY2012 Result Update

Investment arguments
Domestic operations dependent on CV demand: BFL, being a market leader in the CV space for products such as crankshaft, axle beams and connecting rods, with a ~90% market share, has been able to register robust growth sequentially. Over the last few quarters, following the overall recovery in economic and industrial activity, CV volumes have also been showing good recovery. However, due to macroeconomic concerns such as rising interest rates and fuel prices, CV demand has seen a slight slowdown. We estimate the domestic heavy CV segment to record an 810% CAGR over FY201112E. Thus, BFL is likely to witness a slight slowdown in its domestic operations going ahead. Rebound in the global economy essential for overseas operations to continue their momentum: BFL experienced tough times in the overseas market, especially in the US and Europe, during the recession in 2008. Management had adopted various measures to counter the effects of the downturn, such as rightsizing the companys operations globally to adjust to lower demand levels. Other actions taken included reduction of manpower, rationalisation of production, salary cuts, reduction in administrative overheads, increased focus on working capital reduction, conservation of cash and capex holiday in FY2010. The company also focused on improving its operational efficiencies such as yield, scrap reduction, energy cost and outsourcing reduction. All these measures have helped BFL in bringing down its breakeven levels to ~50% utilisation (6065% earlier). We believe recovery in these markets is essential to help BFL improve its consolidated performance going ahead. Non-auto diversification: BFL has been diversifying its product portfolio in the non-auto segment. Though the company has order traction in this segment (oil and gas, power-thermal and nuclear, and rail), the lower level of its clients business in various industries has affected potential ramp-up of utilisation levels of new capacities created especially for the segment. Around 60% of the segments revenue comes from exports, while the balance comes from the domestic market. The company expects to generate ~40% of its revenue from this segment on total incurred capex of around `500cr. Management is confident of growing its non-auto business faster, which would act as a buffer to the prevailing difficult macro environment for its auto business. Further, BFL has entered into a JV with Alstom and NTPC to manufacture state-of-the-art supercritical power plant equipment in India. The JV will design, engineer, manufacture and deliver turbine generator islands of 600800MW supercritical range, with total installed capacity of 5,000MW per year. The manufacturing infrastructure will include plants for manufacturing turbines, generators and all the auxiliaries that go into turbine generator islands. The JV entails an investment of `1,500cr from both the partners. BFL is expected to invest `300cr350cr in the Alstom JV and the capacity is set to be commissioned in 2012. BFLs equity contribution in the NTPC JV would be `50cr over the next two years.

August 10, 2011

Bharat Forge | 1QFY2012 Result Update

Outlook and valuation

We have revised our revenue and earnings estimates downwards to factor in the likely slowdown in the US and the European markets. Nonetheless, on account of the recent correction in the stock price, we maintain our Accumulate view on the stock. At `285, the stock is trading at 13.2x FY2013E EPS and 6.8x EV/EBITDA on a consolidated basis. Our revised target price works out to `325 (`351), at which levels the stock would trade at 15x P/E and 7.7x EV/EBITDA on FY2013E basis.

Exhibit 12: Key assumptions

Y/E March Sales volume Steel Forgings (MT), (incl. Baramati) Crank shafts-finished machine (No.) Front axle assembly & comp. (No.) Utilisation (%) Steel Forgings (MT) Crank shafts-finished machine (No.) Front axle assembly & comp. (No.)
Source: Company, Angel Research

FY08 194,454 385,431 389,403 79.7 80.9 73.0

FY09 134,650 327,660 222,057 53.0 63.0 41.8

FY10 136,762 316,663 174,302 33.8 61.3 32.9

FY11 203,628 437,039 326,741 49.4 84.3 61.0

FY12E 229,460 440,652 320,160 59.1 85.0 60.0

FY13E 249,207 456,205 325,496 63.0 88.0 61.0

Exhibit 13: Angel v/s consensus forecast

Angel estimates FY12E Top line (` cr) EPS (`)
Source: Bloomberg , Angel Research

Consensus FY12E 6,051 18.8 FY13E 7,091 24.8

Variation (%) FY12E (2.4) (3.8) FY13E (6.0) (12.4)

FY13E 6,663 21.7

5,907 18.1

Exhibit 14: One-year forward EV/EBITDA band

(`cr) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 EV (`cr) 5x 10x 15x 20x

Exhibit 15: One-year forward EV/EBITDA chart

(x) 35 30 25 20 15 10 5 0 One-yr forward EV/EBITDA Three-yr average EV/EBITDA

Dec-06

Aug-05

Jan-06

Jun-07

Mar-05

Nov-07

Mar-10

Aug-10

Apr-04

Oct-08

Apr-09

Sep-04

Sep-09

Feb-11

Jul-06

May-08

Jul-11

Feb-10

Sep-09

Jul-05

May-07

Dec-06

Jan-06

Jun-06

Nov-07

Source: Company, Bloomberg , Angel Research

Source: Company, Bloomberg , Angel Research

August 10, 2011

Mar-09

Aug-10

Apr-08

Oct-08

Jan-11

Jul-11

Bharat Forge | 1QFY2012 Result Update

Exhibit 16: Auto Ancillary - Recommendation summary

Company Amara Raja Automotive Axle Bharat Forge* Bosch India# Exide Industries FAG Bearings# Motherson Sumi* Subros
^

Reco. Accumulate Accumulate Accumulate Neutral Accumulate Accumulate Accumulate Accumulate

CMP Tgt. price Upside (`) (`) (%) 242 415 285 7,210 153 1,202 221 33
#

P/E (x) FY12E 11.7 11.2 15.8 22.0 18.8 12.3 21.3 6.5
^

EV/EBITDA (x) FY12E 6.7 6.2 8.1 13.2 11.5 6.9 9.3 4.1 FY13E 5.6 5.2 6.8 11.3 9.6 6.0 7.4 3.7 10.4 9.5 13.2 19.7 16.4 11.2 15.9 6.2

RoE (%) FY12E 23.3 25.6 19.2 20.0 23.0 25.0 27.3 12.2 FY13E 21.5 24.6 19.3 18.6 22.4 22.1 30.9 11.8

FY1113E EPS CAGR (%) 17.3 22.5 31.9 15.6 12.0 21.0 17.3 5.1

FY13E

257 438 325 161 1,285 250 36

6.2 5.4 14.0 5.5 6.9 13.2 10.8

Source: Company, Angel Research; Note: * Consolidated results;

December year end;

September year end

August 10, 2011

Bharat Forge | 1QFY2012 Result Update

Profit & Loss Statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation & Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Recurring PBT % chg Extraordinary Items PBT Tax (% of PBT) PAT Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (Rs) Fully Diluted EPS (Rs) % chg FY08 4,770 173 4,598 4,598 10.8 3,948 2,129 849 678 292 650 7.5 14.1 227 422 1.6 9.2 127 154 34.2 450 3.2 (1) 450 159 35.2 292 (11) 302 302 3.8 6.6 13.6 13.5 27.1 FY09 4,831 120 4,711 4,711 2.5 4,351 2,307 872 709 463 360 (44.6) 7.6 252 108 (74.5) 2.3 129 132 111.5 110 (75.4) (8) 118 69 58.7 49 (18) 66 58 (80.7) 1.2 3.0 2.6 (80.7) FY10 3,373 87 3,286 3,286 (30.3) 3,081 1,578 645 524 334 204 (43.2) 6.2 245 (41) (1.2) 130 106 (65) (17) (48) 12 (24.5) (59) (13) (46) (63) (1.9) (2.1) (2.8) FY11 5,152 153 4,999 4,999 52.2 4,310 2,337 989 637 347 689 237.2 13.8 255 434 8.7 153 155 35.4 437 (1) 438 140 31.9 298 7 291 290 5.8 12.5 12.5 FY12E 6,090 183 5,907 5,907 18.2 5,033 2,747 1,128 750 408 874 26.9 14.8 286 588 35.5 10.0 112 168 26.0 644 47.6 644 213 33.0 432 13 419 419 44.5 7.1 18.0 18.0 44.5 FY13E 6,869 206 6,663 6,663 12.8 5,664 3,098 1,266 846 453 999 14.3 15.0 296 704 19.6 10.6 102 174 22.5 776 20.5 776 256 33.0 520 16 505 505 20.5 7.6 21.7 21.7 20.5

August 10, 2011

Bharat Forge | 1QFY2012 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves & Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 3,100 1,323 1,777 584 299 2,478 318 761 1,399 1,623 856 3,516 4,028 1,560 2,468 322 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 2,463 307 367 2,764 311 888 1,565 1,807 957 41 4,134 4,764 2,324 2,440 143 399 3,404 695 1,023 1,686 2,185 1,219 4,201 4,773 2,620 2,153 143 415 4,114 1,066 1,146 1,902 2,495 1,620 4,331 45 1,610 1,654 70 1,654 137 3,516 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 1,895 132 4,134 47 2,360 2,407 167 1,495 132 4,201 47 2,774 2,821 183 1,195 132 4,331 FY08 FY09 FY10 FY11 FY12E FY13E

August 10, 2011

Bharat Forge | 1QFY2012 Result Update

Cash Flow Statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in loans and advances 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 FY08 450 227 (9) 204 159 306 (658) (92) (44) 154 (640) 10 (135) 91 (252) (286) (621) 939 318 FY09 118 252 178 187 69 292 (666) 299 (31) 132 (266) 2 536 92 (486) 144 170 318 488 FY10 (48) 245 (283) (649) 12 552 16 (273) (9) 106 (160) 100 62 26 (470) (282) 109 488 598 FY11 438 255 (51) 130 140 372 (475) (93) (31) 155 (443) (267) (358) 27 382 (215) (287) 598 311 FY12E 644 286 (245) (602) 213 1,075 (99) (32) 46 168 83 (400) 95 (469) (774) 384 311 695 FY13E 776 296 (128) (165) 256 853 (10) (16) 174 149 (300) 54 (385) (630) 371 695 1,066

August 10, 2011

10

Bharat Forge | 1QFY2012 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 / Interest) 0.6 1.6 3.3 1.0 4.7 0.8 0.9 6.8 (0.3) 0.6 1.8 2.8 0.2 0.5 5.3 (0.1) (0.3) 6.9 1.6 53 53 90 34 1.3 59 47 66 53 0.8 80 58 124 69 1.2 54 46 98 38 1.3 54 46 99 36 1.4 55 46 99 30 12.2 13.2 19.2 2.8 3.0 3.5 (1.0) (1.2) (4.1) 10.8 11.4 17.0 14.1 16.8 19.2 16.5 21.6 19.3 9.2 0.6 1.6 9.6 4.8 0.5 12.2 2.3 0.4 1.4 1.3 2.8 0.8 0.1 (1.2) 1.2 1.0 (1.5) 7.3 1.0 (10.2) 8.7 0.7 1.4 8.3 5.0 0.8 10.8 10.0 0.7 1.6 10.8 4.4 0.4 13.1 10.6 0.7 2.0 13.9 5.1 0.0 14.1 13.6 13.5 23.8 3.5 74.3 2.6 2.6 14.3 1.0 73.8 (2.8) (2.8) 8.9 1.0 65.7 12.5 12.5 23.5 3.5 83.9 18.0 18.0 30.3 2.0 103.4 21.7 21.7 34.4 3.0 121.1 21.0 108.1 12.0 3.8 1.3 1.6 11.8 2.2 20.0 3.9 0.4 1.7 23.2 2.0 32.0 4.3 0.4 2.4 39.2 2.1 22.8 12.2 3.4 1.3 1.5 11.4 1.9 15.8 9.4 2.8 0.7 1.2 8.1 1.7 13.2 8.3 2.4 1.1 1.0 6.8 1.6 FY08 FY09 FY10 FY11 FY12E FY13E

August 10, 2011

11

Bharat Forge | 1QFY2012 Result Update

Research Team Tel: 022 - 3935 7800 DISCLAIMER

E-mail: research@angelbroking.com

Website: www. angelbroking.com

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%)

August 10, 2011

12