Buy Bharat Forge; target of Rs 753: Geojit

Geojit’s research report on Bharat Forge

Bharat Forge Ltd (BFL) is a leading player in the forgings industry. The company is serving several sectors including automobile, power, oil and gas, rail & marine, aerospace, construction, mining etc. Q4FY18 standalone revenue grew by 30.3%YoY due to 24%YoY growth in the tonnage volume. Export revenue grew by 36.5%YoY and domestic business grew by 22.8%YoY due to both US truck & strong domestic auto sales. EBITDA margin improved by 10bpsYoY on the back of improved product mix but lower than our expectation. Adj. PAT grew by 38%YoY. We expect BFL to register 15% revenue CAGR over FY18-20E on account healthy demand from US-CV & domestic auto sales, Expansion of capacities and 15% from new product development. We remain upbeat on the stock considering strong traction in all the segments.

Outlook

At CMP we value BFL at 26x on FY20E EPS with a revised target price of Rs.753 and upgrade our rating from Hold to Buy rating.

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First Published on Jun 8, 2018 03:17 pm