Motilal Oswal gives hold tag to Bharat Forge

Bharat Forge’s Q3FY19 revenues grew 22 per cent yearon-year to `1,690 crore and operating margins rose 31.1 per cent, on account of better realisations. Despite the management expecting the North America Class 8 trucks current order book to sustain current levels of revenue for

FY19/FY20, the broking house doesn’t expect the market to sustain further and expect a sharp decline in order to build from H2FY20 only relief being that the domestic commercial vehicle industry could see some prebuying related to BS VI norms before March 2020. The company has also increased its capex guidance for the next two years to

`750 crore. Given that the broking house has already at the down cycle for the class

8 truck market and not much clarity on revenues from other business is available, it has downgrade the stock to “Hold” from “Accumulate” with a target price of `504, based on 22x September

2020E standalone EPS.

Broking firm: Motilal Oswal Rating: Hold Closing price: `467.65