The shares of the leading Defence stock specializing in the manufacturing and selling of forged and machined components for the auto and industry sector, fell upto 3 percent after the US administration began a probe into imports of heavy truck parts.
Price action
With a market capitalization of Rs. 53,369.03 crores on Thursday, the shares of Bharat Forge Limited fell upto 3.03 percent, making a low of Rs. 1101.00 per share compared to its previous closing price of Rs. 1135.45 per share.
What Happened
Bharat Forge Limited, the auto-to-defence component manufacturer and supplier, fell on today’s trading session following the Trump Administration has launch of a probe into the imports of medium and heavy trucks and parts into the US.
The U.S. Commerce Department has launched an investigation under Section 232 into national security risks posed by a “small number” of foreign suppliers dominating U.S. imports of heavy truck parts. The probe targets trucks over 10,000 pounds, including parts and derivatives, and follows similar investigations into the pharmaceutical and semiconductor sectors.
Bharat Forge, a supplier to Class 8 trucks in North America, could be impacted, as Class 8 trucks are classified as “heavy duty” vehicles weighing between 33,001 and 80,000 pounds. This investigation could lead to potential tariffs, with findings expected within 270 days.
Additionally, the Trump administration had considered exempting auto parts from separate tariffs on China, but President Trump denied such plans, suggesting potential increases in tariffs on Canadian auto imports. The 25 percent tariffs on auto imports and duties on car and light truck parts are set to begin on May 3.
About the Company
Bharat Forge, established by Nilkanthrao A. Kalyani on June 19, 1961, is headquartered in Pune, Maharashtra, and serves as the flagship company of the Kalyani Group. Bharat Forge produces a wide array of components, including front axle beams, steering knuckles, connecting rods, crankshafts, and aluminum castings.
Key Insights
The company has a Return on Capital Employed (ROCE) of 13.71 percent and a Return on Equity (ROE) of 14.3 percent. Its Price-to-Earnings (P/E) ratio stands at 53.34, higher than the industry average of 40.36. Furthermore, the company maintains a current ratio of 2.72, a debt-to-equity ratio of 1.06, and an Earnings Per Share (EPS) of Rs.20.68.
Financials
The company’s revenue declined by 10.41 percent from Rs. 3,922.36 crore to Rs. 3,513.92 crore in Q3FY24-25. Meanwhile, the Net profit declined from Rs. 264.55 crore to Rs. 212.76 crore during the same period.
Written by Sridhar J
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