Bharat Forge sees 15% decline in CV market during CY16; stock slips 4%

Bharat Forge has slipped over 4% on the National Stock Exchange (NSE), after the company said that the commercial vehicle (CV) market is likely to decline 15% in calendar year 2016 (CY16). However, the company expects the passenger car exports to catapult to $100 million by FY18, taking the quantum of passenger cars to around 15% of standalone sales.

US truck sales, oil and gas and mining constitutes about 40% of its standalone revenues, reports suggest. CLICK HERE FOR THE REPORT

The stock opened at Rs 800 on the NSE and touched a low of Rs 773.05 in intra-day deals. A combined 21,10,808 shares were traded till 13:35 hours on both the exchanges.

While industry headwinds loom large, posing a downgrade risk to Bharat Forge's near?term earnings, analysts say the recent correction in stock price (35% in six months) factors in most near?term concerns, rendering the stock a reasonable long?term bet.

“We believe that though the company is facing near?term headwinds from high base, weak class 8 and oil & gas numbers, raising the possibility of near?term earnings cut, medium-to-long term scalability potential in new businesses (aerospace, passenger cars and non?auto segments) will help sustain future growth at reasonable levels,” suggest Amit Mahawar and Swarnim Maheshwari of Edelweiss in a December 08 report.

They maintain ‘buy’ rating on the stock with a price target of Rs 1,210.