Bharat Forge Shares Hit Record High After Unit Wins Rs 287.5 Crore Defence Order
The order entails the supply of missile systems for a contract value of Rs 287.5 crore.
Shares of Bharat Forge Ltd. hit a record high on Monday after its unit, Kalyani Rafael Advanced Systems Pvt., won an order from the Ministry of Defence.
Kalyani Rafael won the contract along with its Israeli joint venture partner, Rafael Advanced Systems Ltd. The order entails the supply of missile systems for a contract value of Rs 287.5 crore. It is expected to be executed over the next 12 months.
Kalyani Rafael is a joint venture of Kalyani Strategic Systems Ltd., a subsidiary of Bharat Forge.
On Aug. 21, the company announced that its subsidiary Kalyani Strategic Systems won two new export orders worth Rs 850 crore for the supply of components and armoured vehicle chassis.
Nomura retained a 'buy' rating on Bharat Forge with a target price of Rs 1,157, implying a potential upside of 18% over the next 12 months.
The brokerage estimates that the company will record nearly Rs 2,000 crore in incremental revenue per year by FY26. And it sees over a 20% Ebitda margin for defence as the company owns all its defence-related intellectual property.
With order wins and a large order book, the forging company’s defence segment is likely to ramp up in fiscal 2025, Nomura said.
It cited adverse U.S. regulations on import taxes and dollar devaluation as downside risks that impact the company's earnings. Exports to the U.S. contributed 40% of Bharat Forge's standalone revenue in the first half of fiscal 2020.
Shares of the company advanced as much as 3.33% before paring gains to trade 2.46% higher at 2:50 p.m., as compared with a 0.33% rise in the NSE Nifty 50.
The share price hit a record high of Rs 1,056.8 per share. The stock has fallen 19% on a year-to-date basis. The total traded volume stood at 1.2 times its 30-day average. The relative strength index was at 75, implying that the stock may be overbought.
Of the 31 analysts tracking the company, 22 maintain a 'buy' rating, two recommend a 'hold,' and seven suggest a 'sell' on the stock, according to Bloomberg data. The average 12-month consensus price target implies a potential downside of 4%.
