Shares of this leading defence stock rose 2 percent following the Competition Commission of India’s (CCI) approval of its acquisition of AAM India Manufacturing Corporation Pvt Ltd. The approval is contingent upon implementing certain voluntary modifications proposed by the companies involved.
Price Movement
During Wednesday’s trading session, shares of Bharat Forge Ltd reached an intra-day high of Rs.1,127.10 per share, rising 6 percent from its previous close of Rs.1,103.60 per share. However, the stock declined later and is currently at Rs.1,110.50. Over the past five years, the shares have delivered over 322 percent returns.
What Happened
The Competition Commission of India (CCI) has approved Bharat Forge Ltd’s acquisition of AAM India Manufacturing Corporation Pvt Ltd, following the acceptance of certain voluntary modifications proposed by the parties. Although the exact details of these changes remain undisclosed, the clearance marks a crucial step in finalizing the transaction.
Earlier, the CCI had sought public comments after expressing concerns that the deal might affect market competition. With the modifications now in place, the deal has been cleared on the condition that the companies fully comply with the agreed terms.
This acquisition is expected to benefit Bharat Forge by enhancing its capabilities in the commercial vehicle axle segment. It will expand the company’s product portfolio and strengthen its position in the automotive components space, supporting its long-term growth strategy.
Earnings Report
According to its latest financial update, Bharat Forge reported consolidated revenue of Rs.3,476 crores in Q3 FY25, showing a 10 percent decline from Rs.3,866 crores in Q3 FY24. The company also saw a drop in net profit, which fell to Rs.213 crores, marking a 16.1 percent decrease from Rs.254 crores in the same period last year.
Ratio Analysis
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.
Target Recommendation
JP Morgan, a prominent brokerage firm, has recommended a “Buy” call on Bharat Forge with a target price of Rs.1,270.00 per share, indicating an upside potential of 14 percent from current market price.
Business Overview
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.
Written by – Siddesh S Raskar
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