CLSA said outlook for domestic & export truck business has already weakened. Hence, it sees a flattish trajectory in FY20-21 at best for topline and profit
Global research firm, CLSA maintained 'sell' call on Bharat Forge and slashed target price to Rs 390 from Rs 420, implying 11 percent potential downside.
"We see risk of a simultaneous slowdown in three key segments. Industrial exports are at risk of a cyclical slowdown," the brokerage reasoned while cutting FY20-21 EPS estimate by 2-3 percent.
CLSA said the outlook for domestic and export truck business has already weakened. Hence, it sees a flattish trajectory in FY20-21 at best for topline and profit.
Earlier, Bharat Forge told Moneycontrol that it would reduce capital expenditure (capex) in India this year, and will instead focus on sweating its assets and make select investments in electric technology companies.
In addition, Class 8 trucks orders in North America, which contributed 20 percent to its standalone revenue, contracted sharply to 10,800 units, down 70 percent compared to the same month last year and 27 percent compared to the previous month.
The decline is attributed to manufacturing backlog and sharp fall in spot freight rates along with large order backlog.Disclaimer: The views and investment tips expressed by brokerages on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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