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Bharat Forge Shares Up 8.75% on Reports of Strong US Class 8 Truck Orders


Bharat Forge Shares: Shares of Bharat Forge Ltd. rose 8.75 per cent to Rs 769.6 in Thursday’s trade. It hit an intraday high of Rs 770.95 and a low of Rs 724.0, respectively, during the day. The stock quoted a 52-week high price of Rs 848.0 and a low of Rs 595.85.

This comes on the heels of preliminary class 8 truck orders in North America reaching a record high on a monthly basis, according to data from ACT research. Orders in September doubled from last year to 56,500 units. On a month-on-month basis, the growth was 164 per cent. The class 8 market is segmented into trucks and tractors, with or without sleeper cabs or truck sleeper compartment attachments.

Over the past 12 months, 249,000 class 8 orders have been booked, ACT research said. The report attributed the strong growth to original equipment manufacturers (OEMs) opening their order boards for 2023 earlier than normal. May to September is generally considered to be a weak period for truck orders.

“US Class 8 truck orders witnessed a healthy recovery on an MoM basis, and comes as a big positive surprise given the muted economic growth environment in developed countries like the US. With a significant order backlog in this space (over six months waiting period), the revival in new truck order numbers bodes well for domestic forging companies serving this space,” ICICI Securities said in a note.

BFL is a leading player in the forging Industry. The company is serving in several sectors including automobile, power, oil and gas, rail & marine, aerospace & defence, construction, mining, etc.

Analysts at Geojit Financial Services believe that domestic demand visibility looks attractive, and margins are expected to show resilience owing to growth coming from the defence, and sustained recovery in the auto space. However, rise in inflation globally, and geopolitical tension is looming as a cause of worry for near term. This led to a downward revision in the margin by 170bps for FY23.

“Amid the crisis, demand visibility looks robust on a medium-to-long term perspective. On a consolidated basis, the valuation seems attractive compared to its historical average,” the brokerage firm said in a company update with an ‘accumulate’ rating and a target price of Rs 815.

The company reported consolidated sales of Rs 2,884.04 crore for the quarter ended 30-Jun-2022, down 21.12 per cent from the previous quarter’s Rs 3,656.05 crore and down 34.24 per cent from the year-ago quarter’s Rs 2,148.39 crore. Its net profit for the latest quarter stood at Rs 164.45 crore, up 7.03 per cent from the same quarter a year ago.

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