While Q3 is likely to be similar to Q2, the brokerage expect the demand environment to start improving from Q4 onward. Motilal Oswal factors in Bharat Forge to post a CAGR of 11%/14%/28% in revenue/Ebitda/PAT over FY25-28E.
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Motilal Oswal Report
Motilal Oswal has reiterated its 'Neutral' rating on Bharat Forge Ltd. with a target price of Rs 1,290, implying a 6% downside from the current market price of Rs 1,374.
The brokerage expects defense, aerospace, and JS Auto Cast (JSA) to be the key growth drivers over the next three to four years, while the outlook for commercial vehicles (CVs), particularly in export markets, remains subdued.
Defense, aerospace and JSA to be key growth drivers ahead
Bharat Forge enjoys an order backlog of almost ~Rs 114 billion in defense to be executable over the next three-four years. Defense is likely to evolve as a long-term sustainable growth story as Bharat Forge has developed capabilities across multiple platforms like ATAGs and carbines and across military and naval applications.
The aerospace business is expected to deliver more than Rs 3.5 billion in revenue in FY26E (Rs 2.5 billion in FY25) and the momentum is likely to remain intact going forward.
Even for JSA, the demand outlook remains healthy, though management is focusing on improving operational efficiencies in business from hereon.
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