Bharat Forge shares dip 4 per cent after CLSA downgrades rating

Shares of Industrial products manufacturer Bharat Forge on Wednesday declined over 4 per cent to Rs 736 per share on the BSE in Wednesday's intraday trade after brokerage firm CLSA downgraded its rating. Dubbing the valuations high, the CLSA has lowered the rating from buy to sell for this scrip.  

The brokerage also cut down its target from Rs 900 to Rs 690, a whooping 23.3 % from the previous target. In its report, the CLSA said exports growth is likely to wane as valuations are too expensive, which will slow down the growth.  

See Zee Business Live TV Streaming Below:

At 10.50 am, shares of Bharat Forge were trading with the loss of Rs 19.30 or 2.51% lower to Rs 750.35 apiece on the BSE.   

The brokerage highlighted that the scrip is trading 8% higher than historical averages and underlined that as much as 44% of the company’s revenue is attached to the diesel truck and oil & gas segments. "This huge reliance on these segments could be hindered by a shift to electric vehicles and renewables. We expect consensus earnings. The downgrading of rating from buy to sell is based on slowing of the company's export growth," said CLSA in its report.  

The brokerage house was of the view that export revenue growth may moderate to a 3% CAGR in FY22-24. "Our FY23/24 consol earnings estimates are also 10-20% below the consensus," it added.  

Earlier, Auto components major Bharat Forge Ltd had reported a consolidated net profit of Rs 270.45 crore for the second quarter ended September 30, 2021. 

The company had posted a consolidated net loss of Rs 1.32 crore in the corresponding period last fiscal, Bharat Forge said in a regulatory filing. 

Its consolidated revenue from operations during July-September 2021 stood at Rs 2,385.62 crore as compared with Rs 1,376.1 crore in the year-ago period, it added.