Bharat Forge share price fall 3% after Q3 numbers; brokerages express mixed views

Shares of Bharat Forge declined almost 3 percent in early trade on BSE and looked on course to extend their losses into the second consecutive session on February 11, a day after the company reported a poor December quarter scorecard.

The auto ancillary and defence company on February 10 registered a massive 58.7 percent year-on-year (YoY) decline in profit due to weak demand both in domestic and international markets. One-time expenses on manpower optimisation also proved to be a drag but the fall was limited due to lower tax rate.

Profit during the quarter declined to Rs 127.8 crore against Rs 310 crore in the same period last year, the company said in its BSE filing.

Consolidated revenue was down 36.4 percent YoY to Rs 1,076.7 crore for the quarter ended December 31, 2019, with domestic revenue falling 39.5 percent and exports declining 34.9 percent YoY.

Read more: Bharat Forge Q3 profit plunges 59% on weak demand

Brokerage firms expressed mixed views post the company's December quarter numbers.

Morgan Stanley has an equal-weight call on the stock with a target price of Rs 401 and said given the global slowdown in commercial vehicles (CVs), Q3 was expected to be a weak quarter.

Morgan Stanley added that the slowdown in the oil and gas segment exacerbated the pain.

"Valuation has corrected but remains lofty. Risk of a global downturn keeps us on the sidelines," said Morgan Stanley.

Nomura has maintained a neutral rating on the stock with a target raised to Rs 475.

"Q3 was a sharp miss and downcycle is playing out. Recovery is likely from the second half of FY21. Aluminium is forging a new revenue stream," said Nomura.

Around 10:35 hrs, shares of Bharat Forge traded 2.04 percent down at Rs 489.35 on BSE.

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