BHARATFORG - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 How I’m Thinking About This

You’re asking for a full-spectrum fundamental analysis of Bharat Forge Ltd (BHARATFORG), a global leader in automotive and industrial forging. I’m evaluating its financial strength, valuation metrics, business model, and technical indicators to determine its long-term investment potential and ideal entry point.

📊 Core Financials Breakdown

Profitability & Growth

EPS: ₹29.3 — solid earnings base

PAT Qtr: ₹339 Cr vs ₹360 Cr — -9.36% QoQ, mild contraction

ROE: 13.7%, ROCE: 14.6% — decent return metrics

Debt-to-equity: 0.39 — moderate leverage, well-managed

Dividend & Cash Flow

Dividend Yield: 0.67% — modest, consistent payout

Cash flows are stable, supported by diversified revenue streams

💰 Valuation Indicators

Metric Value Interpretation

P/E Ratio 43.5 Overvalued vs industry PE of 29.1

P/B Ratio ~5.54 Premium to book value

PEG Ratio 3.76 Overvalued relative to earnings growth

Intrinsic Value ~₹1,150–₹1,200 Trading above fair value

Valuation is stretched, especially with a high PEG ratio and recent profit contraction.

🏭 Business Model & Competitive Edge

Industry: Auto components, defense, aerospace, and industrial manufacturing

Moat: Global footprint, advanced forging tech, strong OEM relationships

Catalysts

Defense and aerospace expansion

EV and lightweight component demand

DII holdings up (+1.06%) — rising domestic institutional confidence

FII holdings down (-1.71%) — cautious global sentiment

Bharat Forge is well-diversified and positioned for long-term industrial and defense growth, though short-term valuation is rich.

📉 Technical & Entry Zone

Current Price: ₹1,270

DMA 50/200: Trading above both — bullish trend

MACD: +22.8 — strong momentum

RSI: 68.5 — nearing overbought zone

📌 Suggested Entry Zone: ₹1,180–₹1,220

This range offers a better margin of safety and aligns with DMA and intrinsic value support.

🕰️ Long-Term Holding Guidance

Hold if already invested, especially for exposure to defense and industrial capex

Buy on dips near ₹1,200 if bullish on global manufacturing and defense tailwinds

2026 Target Price: ₹1,450–₹1,500 based on projected earnings and sector expansion

⭐ Fundamental Rating

4.0

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