1. Edelweiss recommends ‘Buy’ on Bharat Forge shares, sees significant upside going ahead

Edelweiss recommends ‘Buy’ on Bharat Forge shares, sees significant upside going ahead

Bharat Forge (BFL) is the world's largest forging companies with presence across automotive, power, oil & gas (O&G), construction & mining, rail, marine and aerospace industries.

By: | Published: December 30, 2016 6:44 AM
Bharat Forge, BFL, orging companies, construction & mining, rail, marine, aerospace, Lower capex requirement Bharat Forge (BFL) is the world’s largest forging companies with presence across automotive, power, oil & gas (O&G), construction & mining, rail, marine and aerospace industries. (Source: IE)

Bharat Forge (BFL) is the world’s largest forging companies with presence across automotive, power, oil & gas (O&G), construction & mining, rail, marine and aerospace industries. However, during the past 12-15 months, BFL’s business has taken a beating triggered by slowdown in its key user industries—US Class 8 truck market, O&G and construction & equipment.

But, post the gloomy milieu, things are gradually turning around—US Class 8 truck market has shown signs of recovery, the
number of rigs has improved since August 2016 brightening prospects of the company’s O&G business, etc.

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Moreover, we anticipate exponential growth in BFL’s PV business riding on expanding & innovative product portfolio and new client acquisition.

Lower capex requirement complemented by surging demand is bound to boost fixed asset turnover ratio and RoCE over the next 2 years.

Hence, we recommend ‘buy’ as we believe the current price factors in the constraints the company has faced in FY16 and we perceive significant upside going ahead.

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