BHARATFORG - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.3

Let’s roll up our sleeves and dig into Bharat Forge’s financials, valuation story, strategic presence, and long-term prospects

💼 Core Financial Strength

EPS: ₹19.7 — decent earnings, supporting mid-range profitability.

ROE: 11.2% | ROCE: 12.2% — below-par capital efficiency, especially for a capital-heavy business.

Debt-to-Equity: 0.72 — manageable leverage but not ideal in a rising rate environment.

Quarterly PAT: ₹285 Cr vs ₹213 Cr — 22.5% jump shows growth momentum.

Dividend Yield: 0.70% — symbolic but not a driver of income.

📌 While profit growth is visible, the return ratios show room for improvement.

📊 Valuation Metrics

P/E Ratio: 63.2 — notably above the industry average (31.2); steep premium pricing.

P/B Ratio: ~6.29 (₹1,220 ÷ ₹194) — reflects optimism but lacks earnings support.

PEG Ratio: –1,579 — invalid due to distortion; signals caution in growth assumptions.

Intrinsic Value: Likely lower than market price, given earnings and ROE profile.

🔧 Business Model & Competitive Position

Sector: Automotive & Industrial Engineering — forging, defense, EV components, aerospace.

Advantages

Diversified revenue from auto + defense + renewables.

EV and green mobility exposure is futuristic.

Challenges

Cyclical demand from auto & infra sectors.

Reliant on global capex cycles; slowdown can impact order book.

Sharp drop in FII holding (–1.71%) is a red flag on sentiment.

📉 Technical Indicators

RSI: 45.2 — neutral zone, no imminent bounce signal.

MACD: –18.0 — strong bearish momentum.

Volume: Lower than average — signals waning trading interest.

🎯 Suggested Entry Zone

₹1,060 – ₹1,120: Reasonable entry band considering technical weakness and valuation excess.

₹980 – ₹1,020: Deeper accumulation zone if broader correction unfolds.

🚀 Long-Term Outlook

This one suits investors with a 4–6 year horizon, especially if bullish on

India’s defense capex and auto exports.

Bharat Forge’s evolution into EV and clean energy components.

Recovery in global industrial cycle.

Would you like a side-by-side analysis with Ramkrishna Forgings or Sundram Fasteners? Might reveal interesting opportunities hiding in plain sight.

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