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Bharat Forge
Ph-1 complete, ph-2 of re-rating on the anvil; Buy
We expect Bharat Forge, with its diversified business model and
domestic market leadership, to register 49.1% consolidated profit
CAGR over FY11-13e, given our view that the CV industry would
see steady growth over FY11-13e and good overseas demand. We
re-iterate our Buy with a target price of `396 (from `317).
To benefit from steady demand. Domestic auto demand is
expected to follow a steady growth trend, while overseas markets
too are showing signs of improvement. Given that BFL is the
domestic market leader and earns ~60% revenue from overseas,
we expect it to largely benefit from this growth.
JVs, non-auto demand add to revenue. We expect BFL’s four
non-auto JVs to be operational by end-FY13. The JVs, to cater to
power sector requirements, have strong revenue growth and
profitability potential.
Introducing FY13 estimates. We introduce FY13 estimates and
expect sales of `72.2bn, EBITDA margin of 20.7% and EPS of
`27.9 (40.9% yoy growth) by FY13.
Valuation and risks. We value the stock at 20x FY12e PE. We
believe that commencement of operations of JVs would trigger a
re-rating of the stock. Our target price is `396. At present
valuations, BFL trades at 16.1x FY12e EPS. Risks: slowdown in
execution, delayed overseas recovery.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharat Forge
Ph-1 complete, ph-2 of re-rating on the anvil; Buy
We expect Bharat Forge, with its diversified business model and
domestic market leadership, to register 49.1% consolidated profit
CAGR over FY11-13e, given our view that the CV industry would
see steady growth over FY11-13e and good overseas demand. We
re-iterate our Buy with a target price of `396 (from `317).
To benefit from steady demand. Domestic auto demand is
expected to follow a steady growth trend, while overseas markets
too are showing signs of improvement. Given that BFL is the
domestic market leader and earns ~60% revenue from overseas,
we expect it to largely benefit from this growth.
JVs, non-auto demand add to revenue. We expect BFL’s four
non-auto JVs to be operational by end-FY13. The JVs, to cater to
power sector requirements, have strong revenue growth and
profitability potential.
Introducing FY13 estimates. We introduce FY13 estimates and
expect sales of `72.2bn, EBITDA margin of 20.7% and EPS of
`27.9 (40.9% yoy growth) by FY13.
Valuation and risks. We value the stock at 20x FY12e PE. We
believe that commencement of operations of JVs would trigger a
re-rating of the stock. Our target price is `396. At present
valuations, BFL trades at 16.1x FY12e EPS. Risks: slowdown in
execution, delayed overseas recovery.
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