Hold Bharat Forge; target of Rs 1050: Prabhudas Lilladher

hold

Prabhudas Lilladher's research report on Bharat Forge

Bharat Forge Q3FY25 consolidated revenue declined for 2nd consecutive quarter as revenue was down by 10.1% YoY, 21%/8% lower than PLe/consensus estimates. The de-growth in revenue was due to persistent challenges in European business as well as a slowdown in defence business. Consequently, this led its gross profit to decline by 3.9% YoY, however, margin improved by 376bps YoY to 57.7%. EBITDA declined by 10.5% YoY while margin remained flat at 18%. Subdued overall performance led its PAT to decline by 12.3% YoY. BHFC delivered weak Q3FY25 performance with the outlook for European business and looming tariff hike from US remain a key challenge for the growth of its core business in the medium term. The company has been focusing on increasing the non-auto businesses like Aerospace, Defence and other Industrial verticals, however, the varying pace of order execution could impact its growth on consistent basis.

Outlook

Factoring this, we cut our estimates 7-16% for the forecasted period and downgrade our rating from “Accumulate” to “Hold” with a TP of Rs 1,050 (previous Rs1,435), valuing it at P/E of 25x on its Dec’26 EPS.

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Bharat Forge - 13022025 - prabhu