ICICI Direct has given Hold recommendation for Bharat Forge with a target price of Rs. 670 in its research report issued on Feb 14, 2021
ICICI Direct’s research report on Bharat Forge
Bharat Forge (BFL) reported a steady Q3FY21 performance. Standalone revenues came in at Rs 1,036 crore (down 3.8% YoY) despite 8.4% YoY tonnage growth to 50,943 MT. Total India revenues were at Rs 516 crore (up 26.5% YoY; CV up 49.4%, PV up 27.5%, industrial up 16%). Export revenues, on the other hand, were down 19.5% YoY to Rs 512 crore (CV up 7.1%, PV down 8.4%, industrials down 60.1%). Standalone EBITDA for the quarter was at Rs 215 crore, with consequent margins at 20.7%. Margin performance was positively impacted by operating leverage, with gross margin contraction at 70 bps. Standalone PAT was at Rs 92.6 crore, down 27.6% YoY. At the consolidated level, BFL reported share of loss from subsidiaries/associates at Rs 3.6 crore vs. loss of Rs 8.6 crore in Q3FY20.
We therefore retain our HOLD rating on the stock valuing BFL at Rs 670 i.e. 35x P/E on FY23E EPS of Rs 19.1 (earlier TP: Rs 510).