Bharat Forge declines over 6% after Citi tags stock with 'sell' as overseas subsidiaries continue to disappoint

Bharat Forge's operational performance improved, with the EBIDTA margin expanding by 190 basis points to 27.4 percent from 25.5 percent in the year-ago period. This improvement in operational performance could be a positive indicator for investors, as it indicates that the company is managing costs more efficiently and may be better positioned for future growth.

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26 Aug, 2025 12:21

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Bharat Forge's stock price declined by over 6 percent following the company's announcement of its December quarter earnings. The company posted a net profit of Rs 289 crore for the third quarter, a decline of 14.3 percent compared to Rs 337.30 crore.

The company has attributed the decline in net profit to an overseas operational loss of Rs 62 crore, which was due to issues related to the ramp-up of Al forgings capacities in Germany and the US. This information was disclosed by the company in an exchange filing.

The decline in net profit and operational losses may have contributed to a decline in investor confidence, leading to a drop in the stock price.

Despite the decline in net profit, the company managed to achieve its best-ever performance on the revenue front, registering a surge of 22 percent to Rs 1,952 crore in the October-December period.

Additionally, the company's Indian operations secured new business worth around Rs 265 crore across automotive and industrial applications during the period under review.

Bharat Forge's operational performance improved with its EBITDA margin expanding by 190 basis points to 27.4 percent from 25.5 percent in the year-ago period. This improvement in operational performance could be a positive indicator for investors as it indicates that the company is managing costs more efficiently and may be better positioned for future growth.

At 09:49 hours, Bharat Forge was quoting at Rs 820.75, down Rs 53.10, or 6.08 percent on BSE. It had touched an intraday high of Rs 863.75 and an intraday low of Rs 811.80.

While the decline in net profit is a cause for concern, the company's strong revenue growth, new business wins and improved operational performance could be a positive indicator for investors.

CLSA has an outperform rating on the stock with a target of Rs 964 per share. The global research firm expects strong growth in commercial vehicles, passenger vehicles, and defence segments, with lower margin assumptions for FY24/25. The research firm appears to be positive on the company's revenue growth and export revenue.

Citi, on the other hand, has a sell rating on the stock with a target of Rs 690 per share. The brokerage firm noted that the company's Q3 results were supported by forex revaluation gains, and the revenue beat reflected slightly better export revenue. They expressed concerns over its overseas subsidiaries' disappointing performance and expanding losses quarter on quarter (QoQ).

Motilal Oswal has a buy call on the stock with a target of Rs 1,065 per share, indicating that they believe the stock has the potential to provide significant returns for investors. They noted that the Q3 FY23 standalone performance was in line with strong revenue growth offsetting higher-than-estimated costs associated with raw materials. However, they lowered their consolidated EPS estimates for FY23/FY24 due to higher losses at the new aluminium forging plant and higher interest costs.

Overall, it appears that the performance of Bharat Forge's stock in the near future may depend on a variety of factors, such as the company's ability to manage costs, its performance in overseas subsidiaries, and the growth potential of various segments in which it operates. Investors may wish to consider the opinions of various brokerage firms and conduct their own research before making any investment decisions.​