Bharat Forge very well positioned for the long term: Deven Choksey, KR Choksey Securities

Deven Choksey, MD, KR Choksey Securities, in a chat with ET Now talks about Bhrat Forge.

You have a pick as Bharat Forge. The price of their input cost would be collapsing very fast. Is that something that is attracting you here that the order book is strong and at the same time, your input cost swell the margins or are there other thoughts as far as Bharat Forge is concerned?

Of course, that is an added advantage coming in favour of this company in this financial year which should ultimately help them bring up the profits and so would be the valuation at which it is trading. So from that perspective, Bharat Forge gives an immediate trigger but more importantly for the long term, this company is very well positioned now. Their automobile segment is definitely doing very well.

At the same time, they have got a good off take in automobile segment and in the current year and next year thereafter, we are going to be seeing a larger amount of capacities coming up for non-auto segment particularly with NTPC where they are going to have forging unit coming up for taking play into the power sector. So largely, if this particular foray is going to be successful in next two years, then in such situation, this company’s business is completely transformed and from a complete auto dependent company to a mix of auto and non-auto with 60-40 or 50-50 composition, this company’s business model is changing.

So generally midcap ideas are picked up for relatively longer period of time and that is where we believe that this is one company which is slightly neglected. It can be picked into the portfolio given the changing fortunes as far as business scenario is concerned.