Bharat Gears Ltd(BGL) is one of the largest Gear manufacturer in India.This company was originally promoted by Raunaq and
company in 1971.Company is operating with
three business divisions- Gears,Furnaces and Automotive components. Now BGL having
two manufacturing facilities and planning to add one more in Maharastra. BGL’s
total gear manufacturing capacity is divided as 6 lac units of Hypoid
Ring Gear & Pinion ,10 Lac Differential Gears & Crosses and 22 lac Transmission Gears .It
is one of the major suppliers of gears to tractor industry with customers like
Escorts,John Deere,M&M TAFE,Carraro..etc . In the non farm segments BGL’s
customer list includes Ashok Leyland,Tata Motors,JCB,Toyota Kirloskar ..etc .In
addition to gear business BGL also in heat-treating furnace systems with
technical collaboration of AFC-Holcroft of USA. Out of the total sales
,about 90% is coming from Gear segment.Company supplying 80% of its gears to
OEM’s and selling the rest in replacement market.After a long period of
slow growth now company is moving with pace.BGL already crossed the last full
year profit figures in just 9 months of this FY even excluding other
income.Normally fourth quarter figures are the best for the company .Based on
the prediction of normal monsoon for
this year also tractor demand is expected to improve .This will positively
impact company’s sales .In addition to this, benefits from the capacity
expansion and sales from new
manufacturing facility will add to its bottom line in next few years.Increase
in raw material cost is a factor to watch .Considering all these factors ,BGL
is expected to post a Sales around Rs.430 Cr and a net profit of Rs.15 Cr in
this FY.It may post an EPS around Rs.20/- .At current market price of Rs.80/-
BGL is trading with a market capitalization of just 62 Cr which is very low for
a market leader with turnover of more than Rs.400 cr. BUY BGL at CMP of Rs.80/- which is trading both in
NSE and BSE.
