Bharat Forge, India’s leading forging and engineered parts company with sales from auto and non auto segments. Exports, particularly to US for Class 8 also forms a sizable portion (~50%) of the revenues and demand from product line has picked up. The track record of the company is impressive as its has diversified away from auto to other segments in a meaningful manner. Post Covid-19 pandemic supplies to auto OEMs are picking up but for delays caused by the second Covid wave. With oil prices surging, the Oil & Gas segment is picking up as also the Defense segment where indigenization is a government thrust area. Strong management and history of re-inventing itself to enter and scale up new markets are key positives. We would have a rating higher than our present neutral one but rich valuations and threat from EVs. Major risk factor is slowdown in orders as the industries it supplies to are cyclical in nature – 08-06-2021 Price: 758.35 Rating: Neutral Weight Recommendation: Hold
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