Bharat Forge jumped over 5 percent in early trade on Monday to hit a fresh 52-week high of Rs 790.30 per share. The sharp surge came as brokerages maintained a bullish stance on the stock after the forging company reported a profitable fourth quarter of fiscal 2021.
Bharat Forge posted a net profit of Rs 205.4 crore in Q4FY21 as against a loss of Rs 73.3 crore in the year-ago period. The company’s revenue during the quarter rose 48.4 percent to Rs 1,307 crore from Rs 881.2 crore, YoY.
At the operating level, earnings before interest, tax, depreciation, and amortization (EBITDA) increased to Rs 359 crore from Rs 110.3 crore, while EBITDA margin improved to 27.5 percent from 12.5 percent, YoY.
Here’s what brokerages have to say on the stock and Q4 performance of Bharat Forge:
CLSA maintained a buy rating on the stock and raised the target price (TP) to Rs 900 per share from an earlier target of Rs 770. CLSA expects the underlying revenue recovery should continue in the second half of FY22 and FY23.
Global subsidiaries continued to turn around and are reporting positive PBT after two years, CLSA noted.
Nomura upgraded the stock to buy from neutral and raised the target to Rs 924 per share. It also raised the FY23 revenue forecast by 10 percent to Rs 7,300 crore and factors in the margin at 26 percent/28.6 percent/30.6 percent over FY22/23/24.
The brokerage says there are more medium-term upsides beyond FY23-34. The acquisition of Sanghvi Forging will develop infra and renewable business for import substitution. With higher oil prices, oil & gas revenues could be higher, it added.
The brokerage house maintained a buy call with a target at Rs 925 per share. It sees a big turnaround over FY22-23 led by a rebound in US/India trucks and industrial exports. It raised FY22-23 EPS estimates by 27-32 percent.
Morgan Stanley maintained an underweight call with a target of Rs 571 per share as it finds risk-reward unattractive at current levels.
Faster-than-expected cyclical recovery led to impressive Q4, Mogan Stanley said. It expects a strong CV and non-auto rebound.
We expect improvement in growth outlook on existing businesses (CV, industrial) as well new opportunities in defence and e-mobility to aid utilisation. We raise our EPS estimates for FY22E/FY23E by 22 percent/11.8 percent on the back of a big growth surprise across existing and new segments. However, current valuations remain rich.
ICICI Securities upgraded the stock to hold from reduce and raised the TP to Rs 712 fromRs 576 earlier.
All businesses are witnessing a sharp cyclical recovery. This, coupled with its focus on creating new revenue pools in defense and e-Mobility, can further lead to de-risking of the business, Motilal Oswal said.
We estimate consolidated revenue/EBITDA/PAT to grow at a 31 percent/68 percent/302 percent CAGR (FY21-23E). The stock trades at 40.4x/24.6x FY22E/FY23E consolidated EPS, it added.
The brokerage maintained a Buy call with a target of Rs 850 per share.
At 9:55 am, the shares of Bharat Forge were trading 2.30 percent higher at Rs 768.40 apiece on the BSE.
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(Edited by: By Ajay Vaishnav)