Brokerages turn bullish on Bharat Forge, here's why

Share of Bharat Forge rose 5 per cent to hit a 52-week high of Rs 790.30 on BSE as brokerages maintained their bullish stance on the stock post announcement of March quarter earnings.

The stock opened 3.2 per cent higher at Rs 775.00 against the previous close of Rs 751.10. Market cap of the firm rose to Rs 36,046.07 crore.

It has gained 120 per cent in the last 12 months and risen 46 per cent since the beginning of this year.

Share of Bharat Forge stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages.

The company reported a net profit of Rs 205.4 crore for the quarter ended March 2021 against a loss of Rs 73.3 crore in a year-ago period.

For FY21, total income stood at Rs 3,791.9 crore compared to Rs 4,724.7 crore in the previous year. The company posted a 52 per cent decline in profit to Rs 312 crore compared to Rs 473.5 crore in the previous year.

CLSA expects underlying revenue recovery to continue in the second half of FY22 and FY23. The brokerage house noted that the global subsidiaries have reported positive profit before tax (PBT) after 2 years.

It has a 'Buy' call on the stock with a target price of Rs 900 per share.

Nomura has also raised the FY23 revenue forecast by 10 percent to Rs 7,300 crore.

It believes with higher oil prices, oil and gas revenues could be higher. The brokerage firm has upgraded the stock to 'Buy' and raised its target price to Rs 924 per share.

"The stock is our preferred pick in the CV segment. We are raising our estimates by 31/14% over FY22/23E to factor in the positive 4QFY21 results and improving outlook," HDFC Securities mentioned.

The brokerage house has a 'Buy' with a revised target price of INR 860 at 34.5x FY23E EPS (vs 32x earlier) -the multiple has been raised to factor in the reorganised group structure, emerging opportunities in defense and PV segments, and stronger-than-expected demand.

Jefferies has raised FY22-23 EPS estimates by 27-32 per cent. It also has a 'Buy' call on the stock with a target at Rs 925 per share.

"Demand outlook provided by the OEM's is quite robust going ahead. There are certain uncertainties which could hamper the progress of the industry including the shortage of ships, container shortage, and a sharp increase in commodity prices," the company said.

"With the recovery in global business activity and crude prices, we are also witnessing a revival in demand and expect a good pickup in ordering from our customers," it added.