Bharat Forge tumbles 4% on weak management commentary

Bharat Forge shares extended losses from the previous season to trade 4 percent lower on February 13 after the management said it expected the growth to moderate in the coming quarter and in the financial year 2024-25.

At 12.30 pm, the stock was trading at Rs 1,087 on BSE, down 4 percent from the previous close.

“Looking ahead in Q4 and further into FY25, we expect the growth momentum to moderate in both the domestic and export markets across industries. We will endeavour to outperform the market driven by our diversified business mix,” said Amit Kalyani, Joint Managing Director, Bharat Forge.

The comments came after the Pune-based forging firm reported over a 220 percent year-on-year surge in consolidated net profit for the December quarter on to higher revenue.

Consolidated net profit stood at Rs 254.45 crore, while revenue jumped 15.7 percent to Rs 3924 crore.

The defence business significantly boosted revenues, while the oil & gas and agri sectors experienced a decline compared to a year ago.

Speaking to CNBC-TV18 on why Bharat Forge lowered guidance and was cautious about the next quarter and year, Kalyani said, “Our export markets are largely in Europe and the United States, both of which are seeing some amount of cyclical peaking. At the same time, Europe is under pressure – right from cost increases due to both the geo-political events in their vicinity and a slew of fundamental changes on the overall European marketplace.”

Yes Securities said with diverse presence, Bharat Forge is better placed than its previous cycles to benefit from steady orders and ramp up in domestic/exports PVs and CVs and stable to positive outlook for industrials (with strong wins in segments like aerospace, defence, mining and agriculture).

The brokerage, however, cut FY25/26 EPS by 1-3 percent, factoring in lower shipment but a gradual improvement in global subs. It reiterated its “buy” call with revised target price to Rs 1,328 from Rs1,342 based on 28x to Mar’26 EPS.

According to Yes Securities, the stock trades at 27x/23.8x of FY25/26 consolidated EPS (versus 42x 10 year average), do not fully reflect diversifying profit pools.

Shrikant Chouhan of Kotak Securities said some more selloff is likely in Bharat Forge as he believes the company is failing to deliver on EBITDA front. He added that Bharat Forge can drop to Rs 850 where it has fair value.