The Bharat Forge stock price has fallen by more than 7 percent in the past month, but is up 8.51 percent in the past year. On Tuesday, shares of Bharat Forge hit an intraday high of Rs 666, up 2.75 percent on the Bombay Stock Exchange.
The Bharat Forge share price rose by more than 2 percent on Tuesday. According to Motilal Oswal Financial Services, the company is expected to grow thanks to aluminum capacity in the US, recent acquisitions in the industrial sector and the e-mobility business. The Bharat Forge stock price has fallen by more than 7 percent in the past month, but is up 8.51 percent in the past year. In the future, Motilal Oswal sees a 33 percent increase in the share. On Tuesday, shares of Bharat Forge hit an intraday high of Rs 666, up 2.75 percent on the Bombay Stock Exchange.
First year of cyclical recovery in core business slowed down by chip shortage
Motilal Oswal analysts said Bharat Forge, after witnessing a cyclical downturn to FY21, exacerbated by the COVID impact, is experiencing a cyclical recovery in its core businesses in both domestic and international markets. With robust crude oil/commodity prices and increased infrastructure investment by governments in developed markets, non-automotive exports should recover on a sustained basis in the coming years.
Aluminum forgings – a game with lightening the EVs/ICE
Stricter CO2 emissions regulations worldwide and the advent of electric vehicles (EVs) have led to an increase in aluminum use. Bharat Forge’s overseas subsidiaries are witnessing strong demand for aluminum forged components for chassis of EVs and hybrid PVs and so the company has doubled its capacity to 40,000 tons from 20,000 tons. “With all capacities up and running and already fully booked, aluminum forging business is expected to grow to EUR 200-220 million, from EUR 59 million in CY20, over the next 3-4 years,” said Motilal Oswal.
Strengthening industrial activities through acquisitions
Motilal Oswal analysts said Bharat Forge sees huge opportunities in the industrial space (renewable, off-highway and others) and has invested in expanding its capabilities through Sanghvi Forgings (and capabilities through JS Autocast) through acquisitions in the past. nine months. The company has a relatively smaller contribution from renewable energy and industrial segments in India. The acquisitions of Sanghvi Forgings and JS Autocast are intended to strengthen its presence in these segments.
“With the addition of castings, BHFC will be able to address low volume, high value products in the industrial segment by offering a diversified product portfolio to its customers. Management expects the non-automotive sector to grow ~2x in three years,” the brokerage said.
Bharat Forge has been building its capabilities in EV components in vehicle segments through various organic initiatives. In addition to targeting lightweight capabilities in the EV space, the company is also targeting subsystems and complete electric powertrains in vehicle segments. Motilal Oswal estimates Bharat Forge’s Consolidated Revenue, EBITDA and PAT at 10%, 17% and 24% CAGR over FY22-25, respectively.
Growth levers for better consolidated performance
According to the brokerage firm, the cyclical recovery of the major companies and the contributions of the new companies are expected to lead to a sharp recovery for Bharat Forge in the next 2-3 years. This, together with an increase in the overseas aluminum forging business, is likely to lead to improved consolidated performance. Motilal Oswal maintained the BUY rating for the stock with a price target of Rs 860, implying a 33% upside potential. Bharat Forge is Motilal Oswal’s best choice in the auto parts industry.
This post Buy Bharat Forge Shares, Shares Can Rise 33%; check target price was original published at “https://www.financialexpress.com/market/auto-component-stock-to-buy-bharat-forge-share-price-jumps-2-motilal-oswal-says-buy-stock-may-rally-33/2461511/”