Bharat Forge’s stock has experienced a notable increase, soaring 5.5% to reach an impressive intra-day high of Rs 1,175 on the National Stock Exchange. This rise can be attributed to the escalating geopolitical tensions between India and Pakistan, which have ignited interest among investors. Additionally, the company’s robust FY26 defense order book is fueling optimism in the market.
Quarterly Earnings Reveal Challenges
Despite the positive momentum in stock price, Bharat Forge reported lackluster quarterly earnings for Q4FY25. According to analysts, these results fell short of expectations, raising concerns about the company’s future prospects.
- Standalone Revenue: The company recorded a 7% decline year-on-year, bringing in Rs 2,160 crore in Q4FY25.
- Subsidiary Performance: Losses from subsidiaries decreased to Rs 90.8 crore, down from Rs 150 crore in Q4FY24.
Analyst Insights
Nuvama’s Evaluation of Bharat Forge
Nuvama has expressed caution regarding Bharat Forge’s outlook. They have revised their earnings per share estimates for FY26 and FY27 downward by 2% each, reflecting a muted core business environment. Key sectors such as commercial vehicles and global construction equipment are expected to struggle, limiting standalone revenue and EBITDA Compound Annual Growth Rates (CAGRs) to 7% over the period from FY25 to FY27.
- Rating: Nuvama maintains a ‘Hold’ rating on the stock.
- Target Price Adjustment: The target price has been slightly reduced from Rs 1,250 to Rs 1,230.
JM Financial’s Perspective
In a recent research report, JM Financial noted that Bharat Forge’s performance fell short of market expectations. The slowdown in commercial vehicle exports and a weak domestic industrial sector, barring defense, contributed to this underperformance. However, there is a silver lining:
- EBITDA Margin Improvement: The consolidated EBITDA margin improved by 220 basis points year-on-year, reaching 17.7% thanks to reduced losses from international operations and advancements in E-mobility.
- Defense Segment Outlook: The defense sector remains strong, with management projecting a 15-20% revenue growth in FY26. The aerospace segment is also performing well.
JM Financial maintains a ‘Buy’ rating on the stock, with a target price set at Rs 1,250 per equity share.
Stock Performance Overview
Bharat Forge’s stock has shown resilience, gaining 5.6% over the last five trading days and delivering a 21% return in the past month. However, it’s worth noting that the stock has faced challenges, declining over 16% in the last six months and 17% year-on-year.
In summary, while Bharat Forge is navigating a complex landscape shaped by geopolitical factors and mixed earnings, the defense sector’s potential growth and recent stock uptick provide a glimmer of hope for investors.
