While Bharat Forge Ltd.’s core India business is on the growth path, it’s worth noting that the underlying macro environment in the U.S. and Europe is showing signs of weakening.
However, the newly established businesses incubated over the last 5-10 years have reached pivotal moments and they have the potential to offset the anticipated challenges in core operations.
Bharat Forge’s defense segment is poised for significant growth, with execution already underway.
The e-mobility sector presents a substantial opportunity and possesses foundational elements, but the competitive landscape is yet to evolve.
We cut our earnings per share by 8%/ 3% for FY24E/25E to factor in the slower-than-expected ramp up in the U.S. and Europe facilities.
We estimate a consolidated revenue/ Ebitda/profit after tax compound annual growth rate of 13%/37%/82% over FY23-25E.
The stock trades at 39.0x/ 27.8x FY24E/FY25E consolidated EPS. Reiterate ‘Buy’ with a target price of Rs 1,250 (based on 27 times Dec-25E consolidated EPS plus Rs 133 for two gun platforms).