Is Bharat Forge a Good Buy? Analysis

If you’re a newcomer to the Indian stock market, you may have heard of Bharat Forge. Bharat Forge Limited is a leading manufacturer of forging and automotive component products. In this post, we’ll do a fundamental and technical analysis of the stock, comparing it with other stocks in the same industry.

What is Bharat Forge?

Bharat Forge is a leading manufacturer of forged components and automotive products. It was founded in 1961 and is headquartered in Pune, India. The company operates in several sectors, including automotive, power, oil and gas, construction, rail, aerospace, marine, and mining. It has manufacturing facilities in India, Germany, Sweden, France, and the US, and exports its products to over 100 countries.

Is Bharat Forge a government company?

No, Bharat Forge is not a government company. The Kalyani Group started it as a private corporation.

Fundamental Analysis:

Let’s start by looking at Bharat Forge’s latest fundamentals.

  • Market Cap: ₹35,608 Cr.
  • Current Price: ₹765
  • High/Low: ₹920/₹597
  • Stock P/E: 57.0
  • Book Value: ₹141
  • Dividend Yield: 0.92%
  • ROCE: 11.5%
  • ROE: 15.4%
  • Face Value: ₹2.00
  • Graham Number: ₹207
  • Debt to equity: 0.99

The market capitalization of Bharat Forge is over ₹35,000 crore, which indicates that it is a large-cap company. The last traded price of the stock is ₹765, which is lower than its 52-week high of ₹920 but higher than its 52-week low of ₹597. The stock P/E ratio of the company is high, indicating that the market has high expectations from the company. However, the book value of the stock is also high, indicating that the company has solid assets to back up its share price.

The dividend yield of the stock is low at 0.92%, which means that the company is not currently distributing much of its profits to shareholders. The return on capital employed (ROCE) and return on equity (ROE) are decent at 11.5% and 15.4% respectively. However, the debt-to-equity ratio of 0.99 indicates that the company has taken on a significant amount of debt to finance its operations.

Technical Analysis:

Let’s now look at Bharat Forge’s latest technicals. The MarketClub Trade Triangle analysis shows a bearish trend in the stock.

Price and Moving Averages:

Bharat Forge has closed below its short-term moving average. The short-term moving average is currently below mid-term, and above long-term moving averages. The relationship between price and moving averages is bearish in the short-term, and neutral in the mid-long term.

Bharat Forge Technicals
The Technical Analysis

Bollinger Bands:

BHARATFORG has closed above the bottom band by 4.2%. Bollinger Bands are 22.5% wider than normal. The current Bollinger Bandwidth does not tell us anything definitive about how prices will move or how volatile they will be in the future.

Comparative Analysis:

To get a better understanding of the company’s performance, let’s compare it with other stocks in the same industry.

Motherson Sumi Systems Ltd. (MOTHERSUMI): Motherson Sumi Systems is a large-cap company that operates in the same industry as Bharat Forge. The company has a market capitalization of ₹81,563 crore, which is more than double that of BHARATFORG. Motherson Sumi Systems has a lower P/E ratio and a higher dividend yield than BHARATFORG, indicating that it may be a more stable investment option. However, Bharat Forge has a higher ROCE and ROE than Motherson Sumi Systems, indicating that it may have better growth potential.

Another comparable company is Amtek Auto Limited (AMTEKAUTO), which is also a manufacturer of automotive components. However, Amtek Auto has a much smaller market capitalization of ₹1,266 crore, indicating that it is a mid-cap company. Amtek Auto also has a negative P/E ratio, indicating that it is currently not profitable. In contrast, Bharat Forge has a positive P/E ratio, indicating that it is profitable and has the potential for future growth.

Is Bharat Forge a good company?

Based on the fundamental and technical analysis conducted, Bharat Forge appears to be a solid company with the potential for growth. However, as with any investment, there are risks involved, and it is important to conduct further research and analysis before making any investment decisions.

Is Bharat Forge a good buy?

Whether or not this is a good buy depends on individual investment goals and risk tolerance. It is important to consult with a financial advisor and conduct thorough research and analysis before making any investment decisions.

Conclusion:

Bharat Forge is a leading manufacturer of forging and automotive component products with a solid presence in several sectors. The company has a high market capitalization, positive P/E ratio, and decent ROCE and ROE. However, it also has a high debt-to-equity ratio and a low dividend yield. When compared to other companies in the same industry, Bharat Forge appears to have better growth potential than some, but may not be as stable as others. Before making any judgments about an investment, it is vital to do a lot of study and analysis.

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Author: Indrajit Mukherjee

Indrajit is a professional blogger and trading system developer. Amibroker expert, Wordpress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.

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