Bharat Forge drops; BofA-ML sees 12% potential downside

NEW DELHI: Shares of Bharat Forge ended day 6 per cent down at Rs 962.35, after tumbling 6.5 per cent in trade on Tuesday after foreign brokerage, Bank of America Merill Lynch (BofA-ML), cut the target price for the stock to Rs 900 from Rs 1,080.

The brokerage has maintained its 'underperform' rating on the stock as it believes the company's exports of truck parts are already ruling at their peak levels and the numbers could only disappoint in FY17.

The new target price suggests a 12% potential downside on the counter over Monday's closing price of Rs 1,023.55.

The global investment bank believes that the benefit of lower steel cost has been passed through by the company and a worsening product mix may cap the company's margins going ahead.

Non-auto exports are a bigger concern, BofA-ML said, adding that the slowdown has started to hurt the company.

The stock has risen 5 per cent year-to-date, compared with a 6 per cent fall in the BSE auto index during the same period.

On Tuesday, the scrip hit a low of Rs 980, down 4.25 per cent.