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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