Shares of Bharat Forge Ltd fell over three percent on Monday after the Pune-based automotive forging company's second-quarter profit missed analysts estimates as margin in the July-September quarter contracted sharply due to elevated raw material, finance and employee costs.

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The company registered a 36 percent increase in raw material costs to Rs 1,446 crore. Finance costs have more than doubled to Rs 52.6 crore, while employee costs have increased nearly 26 percent to Rs 400.6 crore.

Bharat Forge’s consolidated net profit fell 48 percent year-on-year to Rs 141.6 crore in the quarter-ended September. At 2:19 pm shares of Bharat Forge were at Rs 859, down by 3.12 percent from the previous close on the BSE.

For the July-September quarter the margin stood at 24.3 percent, down 590 basis points, from the corresponding period a year ago. The sharp fall in margin came amid a consolidated 29 percent increase in revenue despite a 39 percent growth in expenses.

The standalone net profit fell 14 percent to Rs 268.1 crore in the quarter ended September, 2022 as compared to Rs 311.7 crore in the quarter ended September 2021.

Also read: Bharat Forge net profit rises over 7% on strong automotive exports

The long term debt has risen 8.5 percent to Rs 2,510 crore in September 2022 as compared to Rs 2315 crore in March 2022. The overseas subsidiaries posted EBITDA loss of Rs 115.7 crore in the second quarter for financial year 2022 and compared to an EBITDA profit of Rs 24.6 crore.

"We expect stable performance across both domestic & export markets in Q3. European aluminium operations will show gradual recovery over the next two quarters," Baba Kalyani , MD of Bharat Forge told CNBC-TV18.

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