Hold Bharat Forge target of Rs 701: Prabhudas Lilladher
Prabhudas Lilladher recommended hold rating on Bharat Forge with a target price of Rs 701 in its research report dated June 07, 2021.
June 08, 2021 / 06:36 PM IST
Prabhudas Lilladher's research report on Bharat Forge
BHFC’s 4QFY21 result beat estimates on all fronts as Revenue/EBITDA/Adj. PAT came higher by 10%/23%/43% over PLe. This was led by i) 39% YoY growth in tonnage (due to strong traction in auto demand for both domestic/exports), ii) 7% YoY growth in realizations (better mix and RM inflation price through) and iii) cost control. Outlook for auto segment remained strong, benefitted by visible growth in Class 8 truck demand in FY22 along with ramp-up in domestic CV/sPVs. This coupled with healthy outlook for industrial (with improvement in global Oil & Gas), has placed BHFC better than previous cycles.
However, the same is well captured in recent valuations expansions at 36.2x/27.8x FY22/23 consol EPS. Factoring all this, we have increased target multiple for BHFC to 26x of FY23 EPS (v/s 24x earlier) and upgraded FY22/23 EPS estimate by 6.7%/7.5%. Hence we maintain Hold with a revised TP of Rs701 (earlier Rs602).
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