Prabhudas Lilladher has given Buy recommendation for Bharat Forge with a target price of Rs. 900 in its research report issued on May 16, 2022
Prabhudas Lilladher’s research report on Bharat Forge
BHFC reported a strong 4QFY22 performance with shipment tonnage growing 8% QoQ to 57.5k, owing to recovery in domestic CV. CV export remains impacted due to semiconductor shortage in Class-8 trucks. EBITDA margin at 25.8% expanded 30bps QoQ. Industrial segment almost doubled in FY22 owing to increasing contribution from O&G – outlook remains healthy as well. Demand outlook robust for CV domestic (underperformance over the last few years), PV exports (aluminum forging and EV) and industrial segment. Management expects Sanghvi forging revenue to increase by 50% in FY23. 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) rising traction in E-mobility segment and (4) potential revenue contribution from defense & renewable segment. Turnaround of Sanghvi Forging will further add to the bottom line.
Maintain BUY with a TP of Rs 900 at 30x FY24E EPS.