Emkay Global Financial's research report on Bharat Forge
BHFC’s Q2FY24 EBITDA margin was up 118bps QoQ to 27% (PAT in line with Consensus). While we take cogni8zance of the Defence ramp-up (build 20% SA revenue contribution in FY26E vs. ~5% in FY23), the outlook for underlying CV industries (global and domestic) and industrial exports is softening (global CV OEMs have projected ~8-15% industry decline in developed markets in 2024; domestic CV growth to moderate on a high base; industrial exports outlook muted as well). We build ~17% FY23-26E EPS CAGR (trim FY24E EPS on global CV-market decline; growth upside from the Defence ramp-up over FY25E-26E largely offset by its margin-dilutive nature).
Outlook
Amid balanced risk-reward (trades near LTA EV/EBITDA), we maintain HOLD, with revised TP of Rs1,030/sh at ~16.5x standalone FY26E EV/EBITDA (rolled-over; previous TP: Rs920/sh).
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