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Bharat Forge surges 8% on reports of strong US Class 8 truck orders

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Shares of (BFL) surged 8 per cent to Rs 768 on the BSE in Thursday’s intra-day trade, lifted by heavy volumes, as media reports suggested that US Class 8 truck clocked strong orders in September.


At 09:41 AM, the stock of the auto ancillary company was trading at Rs 765, as compared to 0.61 per cent rise in the S&P BSE Sensex. Trading volumes on the counter more-than-doubled with a combined 2.8 million equity shares having changed hands on the NSE and BSE till the time of writing of this report.


According to reports, preliminary North American Class 8 net orders for September soared to 56,500 units, the most-ever for a single month. September order activity was up 169 per cent month-on-month (MoM), and 102 per cent year-on-year (YoY), with total orders in the last 12 months totalling 254,000 units

“US Class 8 truck orders witnessed a healthy recovery on an MoM basis, and comes as a big positive surprise given the muted economic growth environment in developed countries like the US. With a significant order backlog in this space (over six months waiting period), the revival in new truck order numbers bodes well for domestic forging companies serving this space,” ICICI Securities said in a note.


BFL is a leading player in the forging Industry. The company is serving in several sectors including automobile, power, oil and gas, rail & marine, aerospace & defence, construction, mining, etc.


Analysts at Geojit Financial Services believe that domestic demand visibility looks attractive, and margins are expected to show resilience owing to growth coming from the defence, and sustained recovery in the auto space. However, rise in inflation globally, and geopolitical tension is looming a cause of worry for near term. This led to a downward revision in margin by 170bps for FY23.


“Amid the crisis, demand visibility looks robust on a medium-to-long term perspective. On a consolidated basis, the valuation seems attractive compared to its historical average,” the brokerage firm said in a company update with a ‘accumulate’ rating, and a target price of Rs 815.

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