Bharat Forge Stock Likely to De-rate on Low US Or­ders

The Economic Times - - Smart -

ET In­tel­li­gence Group: The shares of Bharat Forge, In­dia’s lead­ing forg­ing com­pany, is likely to de-rate fur­ther be­cause of con­tin­ued de­te­ri­o­ra­tion in the US truck or­ders, which ac­counts for nearly 20% of its stand­alone rev­enues.

The class 8 truck or­der in­flows — a bench­mark of the vol­umes of the US heavy truck mar­ket — has been dip­ping for the past twelve months, and shows no signs of bot­tom­ing out, which has ac­cen­tu­ated fear of fur­ther cut in the pro­jected earn­ings growth. The stock has al­ready been de-rated to 20 times of its es­ti­mated next year earn­ings, com­pared with 28 times it used to trade about a year ago.

The US class 8 truck or­der in­flow fell 36% in March and reached its lowest level since 2010. The or­der back­log of the US ve­hi­cle has dropped from a peak of 190,000 units in Fe­bru­ary 2015 to 132,000 in Fe­bru­ary 2016.

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