BHARATFORG - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | BHARATFORG | Market Cap | 65,891 Cr. | Current Price | 1,378 ₹ | High / Low | 1,506 ₹ |
| Stock P/E | 48.4 | Book Value | 231 ₹ | Dividend Yield | 0.62 % | ROCE | 14.6 % |
| ROE | 13.7 % | Face Value | 2.00 ₹ | DMA 50 | 1,414 ₹ | DMA 200 | 1,320 ₹ |
| Chg in FII Hold | -1.22 % | Chg in DII Hold | 1.97 % | PAT Qtr | 316 Cr. | PAT Prev Qtr | 339 Cr. |
| RSI | 40.3 | MACD | -4.58 | Volume | 9,57,642 | Avg Vol 1Wk | 10,38,556 |
| Low price | 919 ₹ | High price | 1,506 ₹ | PEG Ratio | 4.19 | Debt to equity | 0.33 |
| 52w Index | 78.1 % | Qtr Profit Var | -10.3 % | EPS | 28.0 ₹ | Industry PE | 28.0 |
💹 Financials: Bharat Forge shows moderate efficiency with ROE at 13.7% and ROCE at 14.6%. Debt-to-equity at 0.33 indicates manageable leverage but not debt-free. Quarterly PAT declined from 339 Cr. to 316 Cr., reflecting a -10.3% drop, which highlights near-term earnings pressure. EPS stands at 28 ₹, supported by a diversified business model.
📊 Valuation: The stock trades at a P/E of 48.4, significantly higher than the industry average of 28.0, suggesting overvaluation. The P/B ratio is ~6.0 (1378/231), which is elevated but not extreme. PEG ratio of 4.19 indicates valuations are stretched relative to growth. Dividend yield at 0.62% provides modest income return.
🏢 Business Model & Advantage: Bharat Forge operates in the auto components and engineering sector, with exposure to defense, aerospace, and industrial segments. Its competitive advantage lies in technological expertise, global presence, and diversification across industries. The company benefits from cyclical demand in automotive and defense modernization.
📈 Overall Health: Financially stable with moderate debt and consistent cash flows, but profitability growth is slowing. RSI at 40.3 suggests the stock is approaching oversold territory, while MACD at -4.58 indicates weak momentum. Long-term fundamentals remain intact, but valuations are demanding.
🎯 Entry Zone: Attractive entry closer to 1,250–1,300 ₹ range, near DMA 200 support levels. Current price of 1,378 ₹ is slightly above fair value. Long-term investors may accumulate gradually, but caution is advised due to high P/E multiples.
Positive
- Diversified business model across auto, defense, and aerospace.
- Strong global presence and technological expertise.
- Dividend yield of 0.62% provides modest income return.
- DII holdings increased by 1.97%, reflecting domestic institutional confidence.
Limitation
- High P/E (48.4) compared to industry average (28.0).
- PEG ratio of 4.19 suggests overvaluation relative to growth.
- Moderate ROE and ROCE compared to peers.
- Debt-to-equity at 0.33 indicates some leverage risk.
Company Negative News
- Quarterly PAT declined by -10.3%, showing earnings pressure.
- FII holdings decreased by -1.22%, reflecting reduced foreign investor confidence.
Company Positive News
- DII holdings increased by 1.97%, showing strong domestic institutional support.
- Strong positioning in defense and aerospace segments enhances long-term growth visibility.
Industry
- Auto components industry is cyclical, influenced by global demand and supply chain dynamics.
- Defense and aerospace sectors provide growth opportunities through modernization and government contracts.
- Industry P/E at 28.0 indicates Bharat Forge trades at a premium valuation.
Conclusion
Bharat Forge remains a diversified engineering company with exposure to multiple growth sectors. While fundamentals are stable, valuations are stretched and profitability growth is slowing. Entry is advisable near 1,250–1,300 ₹ levels for long-term investors, with cautious accumulation recommended due to high P/E multiples and moderate return ratios.
Would you like me to extend this into a comparative HTML report against another auto component peer like Motherson Sumi to highlight relative strengths and risks?