Balu Forge shares hit 10% upper circuit on Nato-linked ammunition deal

Balu Forge Industries share price rose to ₹489.40 in the intraday trade on the National Stock Exchange (NSE)

Balu Forge Industries share price today

Balu Forge share price hit a 10 per cent upper circuit in Thursday's session as the company secured a multi-year contract for its large caliber ammunition from a North Atlantic Treaty Organization (Nato)-affiliated entity. The scrip rose to the day's high of  ₹489.40 in the intraday trade on the National Stock Exchange (NSE). 

 

As of 2:04 PM, Balu Forge Industries share price was locked in the upper circuit, as compared to a 0.16 per cent decline in the Nifty 50 index. The counter has seen a trade of 2.7 million shares on NSE so far. 

 

 

In the last 12 months, Balu Forge Industries share price has fallen 5 per cent, as compared to a 12.8 per cent advance in the Nifty 50 index.   READ LATEST STOCK MARKET UPDATES LIVE

Why did Balu Forge Industries share price rise today?

Shares of Balu Forge Industries experienced a significant buying momentum on Thursday as the company signed a memorandum of understanding (MoU) with a Nato-linked entity. The five-year agreement, effective February 25, involves the supply of empty shells for large caliber ammunition from the company's greenfield campus in Belgaum, Karnataka.  

The MoU covers the company's all categories of large caliber ammunition, beginning with 155 millimetre (mm) M107, 152 mm, and 155 mm extended range full bore/boat (ERFB/BT) variants. The supplies will be extended to 105 mm, 120 mm, and 81 mm, among others, the company said in an exchange filing.  

Under the terms, Balu Forge Industries will supply 30,000 units of 155 mm M107 shells, and 10,000 units of its 152 mm shells per month in 'Ready to fill' condition for a period of five years.  

"The above volumes exceed the present capacity of the company, but there is already a plan in place to increase the production capacity beyond the 360,000 per annum from internal accruals," Balu Forge Industries said in the exchange filing.  

The pricing has been set at $315 per unit for 155 mm and 152 mm M107s. These prices will be indexed to the London Metal Exchange and will be used as the basis for any fluctuation to safeguard the interests of both the buyer and seller, according to the exchange filing.  READ | Hitachi Energy gets 'Buy' from Ambit on multi-year revenue visibility 

The payment terms are structured as a 20 per cent advance payment, with the remaining balance will be settled via an irrevocable Letter of Credit (LoC), payable within 30 days of the invoice date. 

The initial supplies will commence for 155 mm M107 and 152 mm from April 2026 and will be ramped up in a phased manner.  "Further to trials and approval of the extended range variant (155 mm ERFB BB/BT) will be added as an addendum to this MoU," Balu Forge Industries said.  

The company did not disclose the name of the Nato-affiliated end user due to the sensitive nature of the supplies.