Bharat Forge reports weak Q3FY25 performance; most brokerages slash target price

Shares of auto components major Bharat Forge are in focus in Thursday's session (February 13, 2025) after the company released its December quarter earnings for FY25 post-market hours on Wednesday. For the reporting quarter, the company's financial performance came in lower than estimates with consolidated net profit declining 16 per cent year-on-year (YoY) from Rs 245 crore in the year-ago period to Rs 207 crore in Q3FY25. Zee Business analysts estimated profit to come in at Rs 292 crore. The Q3 revenue also stood lower-than-estimates at Rs 3476 crore, in comparison to Rs 3,866 crore reported in the corresponding period of the previous year.

On the operational front too the company lagged in performance as it reported Rs 625 crore in EBITDA or earnings before interest, taxes, depreciation and amortisation, while it was Rs 697 crore in the same period last year, marking a 10 per cent YoY decline. Margin, however, remained steady YoY at 18 per cent during the review quarter.

The primary factor for decline in the company's performance during the December quarter is the anaemic economic condition in the European Union (EU) which impacted the performance of the European operations and exports into Europe. Furthermore, the lumpy nature of the defence business also impacted the performance of the company during the quarter.

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Alongside, the company also declared an interim dividend of Rs 2.5 per share for the FY24-25.

New order value

During Q3, Bharat Forge group secured new orders worth Rs 830 crores across its various business verticals. In addition, it secured defence orders of 97 crores. The company's order book as of December 31, 2024 stood at Rs 5,706 crores.

Outlook

For Q4FY25 & FY26, the company's management expects the consolidated performance to be stable, as pockets of strength emerge in the newer businesses that is seen to offset the slowdown in the automotive sector globally.

Here's how brokerages view Bharat Forge post its Q3FY25 performance

Citi has maintained its 'sell' rating on the stock with the target pegged at Rs 920, implying a potential downside of 17 per cent from the last close. The brokerage noted that the company's Q3 EBITDA was in-line. Further, it maintains a cautious outlook, especially for exports. Also, the foreign brokerage noted that in the US, there is uncertainty regarding the tariff regime, in addition to some slowdown in demand.

Morgan Stanley on Bharat Forge, meanwhile, maintained an 'overweight' call on the stock with the target slashed to Rs 1,366 from the earlier Rs 1,468 per share.

Also, JP Morgan reiterated its 'overweight' stance on the counter with target price slashed to Rs 1,270 from the earlier Rs 1,550.

Jefferies, meanwhile, maintained its 'underperform' rating with the target slashed to Rs 950 from the earlier Rs 1,100.