Prabhudas Lilladher has given Buy recommendation for Bharat Forge with a target price of Rs. 980 in its research report issued on Feb 11, 2022

Prabhudas Lilladher’s research report on Bharat Forge

BHFC reported a weak 3QFY22 performance with shipment tonnage declining 7% QoQ to 53k, impacted by weak CV export revenue due to semiconductor shortage in Class-8 trucks. EBITDA margin at 25.5% contracted 475bps QoQ due to higher commodity cost (42% of sales vs 37/40% YoY/QoQ). However, industrial segment continues to perform with revenue of Rs 7.3bn (Rs 3.1/6.6 YoY/QoQ), given improvement in oil and gas segment. Management expects domestic as well as exports to improve in 4QFY22. We remain positive on the stock led by (1) multiple growth levers in domestic & export automotive segment with cyclical turnaround in CV industry and easing of the chip shortage going ahead, 2) strong double digit growth in high margin non-auto business 3) good traction in E-mobility segment with good product pipeline set to contribute ~EUR 100mn+ (currently EUR 12-15mn) by FY23-24 and 4) potential revenue contribution from defense segment in next 2 years, owing to strong order book. Turnaround of Sanghvi Forging will also further add to the bottom line.

Outlook

We thus maintain BUY on stock with the TP of Rs 980 (Rs 1,110 earlier) at 32x Dec’23 EPS.

More Info on Trent

At 13:37 hrs Bharat Forge was quoting at Rs 704.60, up Rs 3.80, or 0.54 percent.

It has touched an intraday high of Rs 709.05 and an intraday low of Rs 694.65.

It was trading with volumes of 38,225 shares, compared to its thirty day average of 62,862 shares, a decrease of -39.19 percent.

In the previous trading session, the share closed down 4.31 percent or Rs 31.55 at Rs 700.80.

The share touched its 52-week high Rs 848.00 and 52-week low Rs 555.60 on 10 November, 2021 and 19 April, 2021, respectively.

Currently, it is trading 16.91 percent below its 52-week high and 26.82 percent above its 52-week low.

Market capitalisation stands at Rs 32,805.38 crore.

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