Bharat Forge Ltd shares have fallen 20 per cent in two days, as a host of brokerages cut their earning estimates for the forging company following its weak guidance for March quarter and FY25. From a February 12 high of Rs 1,330 to a low of Rs 1,146.05 today, the stock has fallen 20.04 per cent. Near-term outlook remains challenging on account of slowdown in some of the company’s key segments, said Kotak Institutional Equities.
The brokerage expects Bharat Forge's newer businesses to drive growth over the coming years but believes the stock price is not adequately factoring in EV risks on select core businesses and ramping-up delays in its newer focused business. This brokerage has retained its 'Sell' rating on the stock with a target value of Rs 850.
Emkay Global said while it takes cognizance of the ramp-up in Defence segment, it believes the growth outlook for domestic commercial vehicles segment is soft beyond FY24 and outlook for global exports, including industrials, is also muted. The domestic brokerage has cut its EPS estimates by 4.6 per cent for FY24 and 4 per cent for FY26 and suggested a target of Rs 1,100 per share on the stock.
The Bharat Forge stock fell 5.61 per cent to hit a low of Rs 1,063.40 on BSE.
Bharat Forge had on Monday clocked a 15.9 per cent growth in sales at Rs 2,263 crore. Its Ebitda was up 30.9 per cent at Rs 645 crore. Ebitda margins for the December quarter stood at 28.5 per cent, up 330 basis points YoY, driven by cost optimisation and favourable product mix.
YES Securities said it has cut its FY25 and FY26 EPS estimates by 1-3 per cent to factor in for lower shipment and gradual improvement in global subsidiaries.
"We reiterate BUY with revised target of Rs 1,328 against Rs 1,342 earlier) based on 28 timers to March 2026 EPS. Bharat Forge trades at 27 times/23.8 times of FY25/26 consolidated EPS and do not fully reflect diversifying profit pools (execution in industrial segment led by defence, aerospace)," it said.
Nuvama said a weakening of European and US economies poses a challenge ahead for core segments such as MHCV and oil & gas. This, coupled with lower domestic MHCV/PV growth, shall lead to moderation in revenue and Ebitda CAGR to 12 per cent and 13 per cent over FY23–26E, it said. This brokerage has revised downward its target on the stock to Rs 1,080 from Rs 1,140).
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