Geojit has given Buy recommendation for Bharat Forge with a target price of Rs. 850 in its research report issued on Jun 07, 2021
Geojit’s research report on Bharat Forge
Bharat Forge Ltd (BFL) is a leading player in the forgings industry. The company is serving several sectors including automobile, power, oil and gas, rail & marine, aerospace & defence, construction, mining, etc. Q4FY21 has witnessed a standalone revenue growth of 26.2%QoQ on the back of 43% growth in exports (US truck sales and Oil & Gas) and 9.6% growth in domestic revenues. Despite cost inflationary pressure, margin expanded by 680bps from Q3FY21, owing to superior product mix and cost control initiatives. The demand for US class 8 truck sales will continues to remain robust for FY22. The US truck order book grew by 273%YoY for Q4FY21. However, India truck demand is likely to be weak for H1FY22 and expect steady recovery from H2. Government’s initiative to enhance local manufacturing through the announcement of Production linked schemes (PLI) & mission of Atma Nirbharata in defense, has started opening new orders for BFL.
Amid crisis, the demand visibility looks robust on a medium basis for BFL, owing to growth coming from the export and defence sector and thus reiterate our Buy rating.