Bharat Forge Sees India Truck Demand Recovering After August

Trucks are parked-up at the Delhi-Ghaziabad border in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

Bharat Forge Sees India Truck Demand Recovering After August

Bharat Forge Ltd. expects export demand to continue driving growth even as it is optimistic about a domestic rebound in the ongoing fiscal.

Exports, along with lower other expenses, helped the company beat operating income estimates in the quarter ended March, according to Amit Kalyani, deputy managing director. There is strong demand from all customers outside India despite clients facing chip shortage, he said.

Q4 Highlights (QoQ)

  • Revenue rose 21% to Rs 2,083 crore.
  • Operating income rose 50%.
  • Net profit before tax doubled to Rs 294 crore.
  • In full FY21, consolidated revenues declined 21%.

But the company is hopeful of faring much better in FY22.

“Passenger cars are doing well globally, the CV (commercial vehicle) segment is doing well,” he told BloombergQuint’s Niraj Shah in an interview. “With the U.S. stimulus plan, all kinds of infrastructure projects will do well and we can see a secular two- to three-year bull run in all the infra-equipment segment demand.”

Revenue from overseas subsidiaries can hit $500 million in the next two to three years, with double-digit operating margins, he said. And the company expects its aluminium and the oil & gas segments to perform better.

While local lockdowns hurt the rebound in commercial vehicle segment, Kalyani is hopeful of the growth picking up from August as the first half of 2021 “seems to be a washout”.

While the company’s balance sheet is “strong”, Kalyani said Bharat Forge won’t require additional capex to meet expected demand. But it may look at adding “some inorganic capacities judiciously”. Like its acquisition of Sanghavi Forging and Engineering Ltd.

Brokerage View


  • Expects a strong recovery in CV and industrial segments, led by higher demand for freight and increase in government capex.
  • Valuations expensive at 32 times its estimated consolidated earnings for FY23.
  • Maintains ‘sell’ rating with revised fair value of Rs 485 — the stock is currently trading around Rs 747.


  • Bharat Forge is at the cusp of an upcycle, with key segments of domestic and U.S. trucks set to see strong revival in FY22-23.
  • Raises target price to Rs 845, implying a valuation of 25 times estimated consolidated EPS for FY23E.

Watch the full interview here:

Also read: Retail Tractor Sales Signal Collapse In Rural Demand In May

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