Bharat Forge Q2 Results Review - Weak Demand In Core Segments Hurts Earnings: Motilal Oswal

Motilal Oswal Report

Bharat Forge Ltd.’s Q2 FY25 overall performance was below our estimates, primarily due to lower-than-estimated growth in the domestic business and a decline in exports. However, the slowdown in its core segments – commercial vehicles and passenger vehicles (in both domestic and exports) – was broadly offset by strong growth in defense and JS AutoCast segments.

We cut our FY25E/FY26E earnings per share by 16/11% to factor in demand weakness in its core segments and in Europe. Defense and JS AutoCast segments are likely to continue to be its key growth pillars in the near term.

The stock appears fairly valued at the current valuation of 47.5x/34.0x FY25E/FY26E consolidated earnings per share. We reiterate our Neutral rating with a target price of Rs 1,320 (based on 30 times Sep’26E consolidated EPS).

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