Buy Bharat Forge, target price Rs 840: ICICI Direct

ICICI Direct has buy call on Bharat Forge with a target price of Rs 840.0. The current market price of Bharat Forge is Rs 692.15 Time period given by analyst is year when Bharat Forge price can reach defined target.

Bharat Forge, incorporated in the year 1961, is a Large Cap company (having a market cap of Rs 32067.42 crore) operating in Auto Ancillaries sector.

Bharat Forge key Products/Revenue Segments include Steel Forgings, Scrap, Export Incentives, Job Work, Dies & Tools and Wind Mills for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 3656.05 crore, up 50.54 % from last quarter Total Income of Rs 2428.64 crore and up 71.23 % from last year same quarter Total Income of Rs 2135.23 crore. Company has reported net profit after tax of Rs 242.56 crore in latest quarter.

Investment Rationale
Bharat Forge's (BFL) share price has grown at ~4.7% CAGR over the past five years (from Rs 527 levels in May 2017), outperforming Nifty Auto index. The brokerage retained BUY rating on BFL, tracking upbeat commentary on growth.

"Expected cyclical upswing in India CV, strong order backlog of US Class 8 truck, healthy outlook for PV segment amid personal mobility, pick-up in drilling activity amid higher oil prices and efforts to diversify the revenue base (EV products) to result in robust 14.4% net sales CAGR over FY22-24E. With operating leverage at play and commodity inflation a pass through, EBITDA margins are seen in the range of 18-19%, going forward. Consequent EBITDA, PAT seen growing at 13.8% CAGR in FY22-24E," ICICIDirect said.

Promoter/FII Holdings
Promoters held 45.25 per cent stake in the company as of 31-Mar-2022, while FIIs owned 19.8 per cent, DIIs 23.54 per cent.