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Buy Bharat Forge; target of Rs 865: Motilal Oswal

Motilal Oswal is bullish on Bharat Forge recommended buy rating on the stock with a target price of Rs 865 in its research report dated May 16, 2022.

May 17, 2022 / 08:00 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Motilal Oswal's research report on Bharat Forge


Bharat Forge (BHFC)’s 4QFY22 result was above expectation propelled by strong all-round performance with better-than-expected revenue, margins and PAT. While all the core businesses are seeing a sharp cyclical recovery, BHFC’s initiatives to diversify into aluminum/lightweighting and EV components have started to bear fruit. FY23E will be the first full year of contribution from the company’s recently acquired businesses. We upgrade our FY23E/24E consolidated EPS by ~10%/4% to factor in: a) a good recovery in India Auto and tractors, b) lowering of estimates for the US CVs and c) higher steel prices.



Outlook


We are yet to build in any contributions from its US aluminum business, Sanghvi Forgings, and JS Auto. Reiterate BUY with a TP of INR865 (premised on 24x Jun’24E EPS).

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first published: May 17, 2022 07:59 pm
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