Bharat Forge Share Price: Auto components maker Bharat Forge’s shares rose 8 per cent to Rs 796.55 on the BSE in Friday’s intra-day trade after the company reported in-line performance for the June quarter (Q1FY23) with standalone revenue up 5.1 per cent sequentially at Rs 1,759 crore. It reported consolidated net profit increased 7.03 percent and stood at Rs 160.37 crore for the April-June quarter as compared to Rs 152.7 in the corresponding period a year ago. Its consolidated revenue from operations during the period under review stood increased by 35 percent and stood at Rs 2,851.46 crore. In the first quarter of last year, it stood at Rs 2,107.68 crore.
However, automotive export revenue grew, driven by both commercial and passenger vehicle segments, it said, adding in Europe, the geopolitical crisis impacted overall demand and supply chain. Exports added to 60 per cent of the company’s revenue.
Looking ahead in to Q2FY23, the management expects stable performance across both the domestic and export markets despite uncertainty arising from the macro- economic headwinds caused by monetary tightening.
The scrip has advanced 16.4 per cent in the past one month till date, while the benchmark BSE Sensex has gained 8.85 per cent during the same period. However, in the last one year, the stock has underperformed by falling 4 per cent against a 8 per cent rally in the benchmark index. The stock had hit a record high of Rs 848 on November 10, 2021.
According to exchange data, the stock traded at a price-to-earnings (P/E) multiple of 30.65 while price-to-book ratio stood at 4.97. A higher P/E ratio shows that investors are willing to pay a higher price for per rupee earnings given by the stock because of better future growth expectations. The price-to-book value indicates the inherent value of a company and it reflects the price investors are ready to pay even for no growth in a business.
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“Going forward, we expect standalone demand momentum to be strong for Bharat Forge led by sustained recovery in domestic demand, both in auto and non-auto segments; strong export demand in PVs and aerospace and stable demand from oil and gas. Overseas subsidiary margins are expected to normalise as the US Al forging facility ramps to full capacity. Also, near-term cost headwinds are likely to be partially mitigated by favourable currency movement and healthy revenue growth,” analysts at HDFC Securities said in result update.
All businesses are seeing a sharp cyclical recovery. This, coupled with its focus on creating new revenue pools in Aerospace, Defense, and e-Mobility, can lead to a de-risking of the business, according to Motilal Oswal Financial Services.
“We have upgraded our numbers for the standalone entity, which will offset the negative impact of the US aluminum forging business that is ramping up. We have maintained our FY23/FY24 EPS estimate. We are yet to build in any contribution from Sanghvi Forgings, and JS Auto,” the brokerage firm said in result update.
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