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