ICICI Securities Raises Target Price for Bharat Forge to Rs 1900

Bharat Forge Misses Estimates, Yet Medium- to Long-Term Prospects Remain Compelling

Bharat Forge's (BHFC) consolidated revenue and EBITDA fell short of ICICI Securities' expectations. Despite this, the management's outlook on the company's future remained optimistic. The robust recovery in Class-8 truck demand and healthy momentum in the domestic commercial vehicle (CV) segment are expected to drive growth. This positive sentiment is also bolstered by a rising orderbook in newer verticals such as the defence and aerospace sectors.

Key Monitorables

Key factors that will impact Bharat Forge's performance include the profitability of its overseas subsidiaries and inflationary pressures. These will be crucial in determining the company's growth trajectory.

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Revised Estimates and Target Price

ICICI Securities has raised its estimated EBITDA for FY27 and FY28 by 1% and 7%, respectively. This upward revision is driven by the expected ramp-up in defence and aerospace businesses, as well as the recovery in US CV demand. Given the stock's sharp rally of approximately 52% in the last six months, ICICI Securities has downgraded its recommendation to HOLD from Add. The target price has been revised to INR 1,900, based on 35x FY28E earnings per share (EPS).

Comparison of Revised Estimates

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Note: The original estimates were not provided in the original text.