Bharat Forge Q1 Results Review - Healthy Beat; Demand Outlook Positive Across Divisions: Motilal Oswal

Motilal Oswal Report

Bharat Forge Ltd.’s Q1 FY24 standalone performance beats estimates, led by better than-expected volumes at 67.8 kilo tonnes (versus estimate: 64.3 kt) and realisations of Rs 313.9 kilo/tonne (versus estimate Rs 311.2 k/tonne).

Bharat Forge has guided toward positive demand outlook across divisions. Additionally, defence business contributed Rs 2.5 billion in Q1 and is expected to be ~10% of revenue mix in FY24, driven by order backlog of Rs 22-23 billion to be executed over the next 18 months.

We have changed our earnings per share estimate by -4%/+4.5% for FY24E/25E to factor in for slower-than-expected ramp up in U.S. facility and execution of defence orders in the coming quarters.

We reiterate our Buy' rating on the stock with a target price of Rs 1,135 (based on 25 times September-25E consolidated EPS plus Rs 101 for two gun platforms).

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