Bharat Forge shares hit 52-week high on bagging ₹850 cr export orders

Shares of Bharat Forge surged as much as 2.24% to hit a 52-week high of ₹991.30 crore, after the company’s wholly-owned subsidiary, Kalyani Strategic Systems bagged two export orders worth ₹850 crore from friendly countries for the supply of components and armoured vehicle chassis.

The share price of the forging company opened at ₹978.85, higher by 0.96%, as against the closing price of the previous session at ₹969.50. At 1:48 pm, shares of Bharat Forge were trading 1.17% higher at ₹980.85. The stock of Bharat Forge is trading 48.43% higher than the 52-week low of ₹677.85, which the company touched on September 29 last year. During the session, the market capitalisation of Bharat Forge stood at ₹45,658.67 crore with 55,927 shares exchanging hands as against the two-week average of 0.76 lakh shares.

According to the company, the order will be supplied over the period of 18 months time frame and is subject to necessary government approvals. Kalyani Strategic Systems drives the defense business initiatives of Bharat Forge.

"Kalyani Strategic Systems Limited, a wholly-owned Defence subsidiary of Bharat Forge, has bagged two export orders aggregating to EURO 93.87 million (~₹850 crore) from friendly countries for supply of components and Armoured vehicle chassis to be executed over 18 months’ timeframe. This is subject to necessary government approvals," the company says in a regulatory filing.

Earlier this year, the Pune-headquartered company decided “to house all its defence-related investments under Kalyani Strategic Systems Limited (KSSL) for a better strategic alignment.

In the April to June quarter this year, the profit of the company surged as much as 34% year-on-year (YoY) to ₹213.73 crore as against ₹160.37 crore in the same period last year. The company’s revenue from operations stood at ₹3,877.27 crore, up 40% during the quarter under review, as against ₹2,851.46 crore in the same period last year. The board has also approved the conversion of existing intercorporate deposits to its subsidiary Kalyani Powertrain Limited, amounting to ₹111.3 crore into equity shares, to reduce the overall borrowings at Kalyani Powertrain. The company has also approved further investment of ₹150 crore in the subsidiary in one or more tranches. KTPL houses all the electronic vehicle initiatives of the company.

Notably, most analysts have retained a 'BUY' rating for Bharat Forge. "We continue to highlight that BHFC has multiple growth levers to offset any potential slowdown from US Class8 which include: (1) defence orders that are likely to see this segment’s revenue ramp-up to INR 17bn by FY25E, from INR 3.5bn in FY23, (2) strong growth expected in PV and industrial exports, (3) huge ramp-up potential at JS-Auto Cast, given its capacity is expected to increase by 2x and there is a huge demand for castings, both in India and abroad, (4) strong order backlog in aerospace, which would help boost revenue to INR 5bn over next the four years, from INR 1.7bn.," says analysts at HSIE Institutional Research. The brokerage firm has revised the target price to ₹1,069 with a BUY rating.

Meanwhile, analysts at Motilal Oswal expect an approximately 10% revenue mix in FY24 driven by an order backlog of ₹22-23 billion to be executed over the next 18 months. The brokerage firm has reiterated a BUY rating with a target price of ₹1,135.