Credit Suisse, Citigroup cut target price for Bharat Forge despite healthy Q3 result


Global brokerage firms such as Credit Suisse, Citigroup slashed their respective target price of Bharat Forge largely on future growth estimates. Although the auto ancillary and defence company reported healthy 35.9 percent on year growth in third-quarter profit, driven by healthy truck orders and operating income.

Profit for the quarter increased to Rs 309.8 crore from Rs 228 crore in the same period last year. Other income and forex gains also boosted profitability.

Numbers were ahead of estimates on all parameters for the quarter. A CNBC-TV18 poll estimates for profit were at Rs 264 crore on revenue Rs 1,677 crore. EBITDA was estimated at Rs 485 crore and margin at 28.9 percent.

Most global brokerage firms maintained their positive rating on Bharat Forge but revised their target downwards to build in marginal weakness seen in commercial vehicle sales in FY21.

Credit Suisse maintained its outperform rating on Bharat Forge but slashed its target price to Rs 570 from Rs 690 earlier.

The FY20e outlook remains decent, but a cyclical reversal is likely in FY21. The global investment bank is building in marginal weakness in commercial vehicle space (CVs) in FY21e.

It also slashed its EPS estimate by 1-12 percent for FY21. And, a cyclical reversal in the US could be a risk, said the Credit Suisse note.

Citigroup maintained its Neutral rating on Bharat Forge after December quarter results but slashed its 12-month target price to Rs 540 from Rs 670 earlier.

The global investment bank marginally increases their FY19 earnings estimates by 1 percent. The FY20/21 earnings are however cut by 3-9 percent. The global investment bank also slashed its domestic CV growth assumptions, particularly for FY21.

Disclaimer: The above report is compiled from information available on public platforms. advises users to check with certified experts before taking any investment decisions

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