The stock has gained 33 percent in the last few weeks after a sharp decline in the January-April period.
Bharat Forge share price gained 3.4 percent intraday on May 26 after brokerage house CLSA upgraded its rating on the stock from "sell" to "underperform".
The target price, however, was cut to Rs 300 per share as the Pune-based company reduced its FY20-22 EBITDA/EPS estimates by 20-82 percent.
The brokerage said end markets have been in a decline for almost a year and COVID-19 could extend the downcycle by three to four quarters. Hence, operating metrics were likely to deteriorate in FY21 and reflected in the stock price correction, CNBC-TV18 said.
The stock tanked 59 percent during the January 15-April 7 period this year but gained 33 percent in the last six weeks. It was trading at Rs 291.30, up 2.55 percent, on the BSE at 1027 hours.
The company was expected to continue its deleveraging cycle and generate free cash flow during FY20-22, CLSA said. It expected the company's net debt to decline by Rs 900 crore over FY20-22.
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