Target: ₹900
CMP: ₹649.45
Bharat Forge (BHFC) reported a strong Q4-FY22 performance with shipment tonnage growing 3 per cent YoY and 8 per cent QoQ to 57,500 MT largely owing to recovery in domestic CV. CV export remains impacted due to semiconductor shortage in Class-8 trucks. EBITDA margin at 25.8 per cent expanded 30 bps QoQ. Standalone revenue grew 28 per cent YoY and 4 per cent QoQ. Sharp YoY increase in revenue is on account of full pass-through of inflated commodity costs
The management expects Sanghvi forging revenue to increase by 50 per cent in FY23. BHFC has won orders worth $150 million for steel and aluminum forging for the US market. In India, the company has won ₹1,000-crore worth of orders for domestic and export markets. Tork also has an order book of 1,000 units. BHFC’s overall EV order book stands at ₹1,500 crore. For artillery guns, order processing should pick up speed soon.
We remain positive on the stock led by multiple growth levers in domestic and export automotive segment with cyclical turnaround in the CV industry and easing of the chip shortage going ahead; strong double-digit growth in high-margin non-auto business; rising traction in e-mobility segment; and potential revenue contribution from defence and renewable segment. Turnaround of Sanghvi Forging will further add to the bottom line.