Stock Tips: The prices of Bharat Forge have weakened by 8 percent so far this year, but according to market experts, investors can earn up to 33 percent profit by investing in it.
Stock Tips: The prices of Bharat Forge have weakened by 8 percent so far this year in 2022, but according to market experts, investors can earn up to 33 percent profit by investing in it. Today (March 15) it had strengthened about 2 percent in intra-day. According to market experts, its growth is looking good on the back of US aluminum capacity, recent industrial acquisitions and entry into the e-mobility business.
Brokerage firm Motilal Oswal Financial Services has fixed a target price of Rs 860 per share for investing in it and today it closed at Rs 652.95 on NSE. This stock is Motilal Oswal’s top pick in the auto component industry. Bharat Forge is an Indian MMC involved in the forging, automotive, energy, construction and mining, railway, marine, aerospace and defense industries.
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That’s why experts are trusting
- The company benefits from the increasing demand for aluminum: Globally, the rules regarding carbon dioxide are being tightened and the trend of electric vehicles is increasing. Due to this the consumption of aluminum is increasing. The overseas arm of Bharat Forge is getting more demand for aluminum forged components for chassis of electric vehicles and hybrid passenger vehicles. The company has increased its capacity from 20 thousand tonnes to 40 thousand tonnes. According to market experts, the company’s aluminum forging business is expected to grow from €59 million (Rs 497.52 crore) in the year 2020 to €20-220 million (Rs 1686.52-1855.17 crore) in the next three to four years.
- Strengthened by recent acquisitions: Bharat Ford has in the last 9 months expanded its capacity through the acquisition of Shanghvi Forgings and through the acquisition of JS Autocast. Bharat Forge does not have much presence in the renewable energy and industrial segments in India, but after buying the stake of Shanghvi Forgings and JS Autocast, the share of Bharat Forge will increase in both these sectors. The management expects that the non-auto business will double in the next three years.
- Growth prospects due to the increasing trend of electric vehicles: Bharat Forge is working on increasing its capacity in various segments of electric vehicle components. In the electric vehicle space, apart from sub-systems, the company is also targeting complete electric powertrains in various segments. Bharat Forge holds 100 per cent stake in Kalyani Powertrain, 50 per cent in power electronics company Refu JV, 10 per cent in electronic-commercial startup Tevva Motors and 60.7 per cent in electric motorcycle and motor maker Tork Motors.
Major risk of investment
Keeping the buy rating of Bharat Forge intact, the brokerage firm has fixed the target price at Rs 860 per share. However, there are also some risks in investing in this. According to market experts, if the problem of chip shortage is not resolved soon, then its business may be affected. Apart from this, if there are problems related to environmental, social and governance (ESG) regarding the defense business, then the business of the company can also be affected.
(The stock recommendations given in the story are those of the respective research analyst and brokerage firm. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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