Buy Bharat Forge; target of Rs 806: Motilal Oswal


Motilal Oswal’s research report on Bharat Forge

Revenues increased 30% YoY to INR14.7b (est INR14.3b) led by tonnage growth of 24.5% YoY to 67.7kMT (est. of 67.2kMT) and realizations growth of 4.7% YoY (flat QoQ) to INR213.5k/ton (in-line). EBITDA margin contracted 150bp QoQ (flat YoY) to 28.5% (est 30.2%), impacted by higher RM cost and forex loss on Fx loan.

Outlook

We have downgraded our FY19E/20E EPS by 4-7% to factor for adverse mix (PVs) and higher RM cost. BHFC trades at 26.8x/21.1x FY19E/20E EPS. Maintain Buy with a TP of INR806 (25x Mar20E consol. EPS).


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