Bharat Forge rallies despite poor results

Bharat Forge has turned green, gaining almost 12 per cent. On Aug 5, the shares opened at Rs 724 and closed at Rs 814, gaining almost Rs 90 and are up by 12.51 per cent. Shares of the company in the last 1 month have gained by 5 percent. 52 weeks' High/Low stands at Rs 1292.5/686.80.However in the last 1 year the shares have slipped by almost 35 per cent.

The stocks have reacted in an unusual manner as the company has posted a timid result in Q1FY17. In Q1, total income from operations has declined by 19 per cent as compared to Q1FY16 and stands at Rs 957.03 crores. EBITDA for the quarter too has remained fragile and stands at Rs 244.41 crores ,which has declined by 31 per cent. Net profits are down by 38 per cent as compared to Q1FY16, and stand at Rs 122.06 crores.

Company had a very challenging quarter, largely because of continuing weak demand and an inventory destocking in the commodity space, especially in the oil and gas space. This together with the severe downturn in the North American truck market has resulted in a weak performance in Q1.

The shares were largely undervalued in the last 3 months, which has reflected in the stock performance on Aug 5. However, one more thing which has added to the rally is the market share of the company which has remained intact. 

Bharat Forge Limited, is a company that manufactures various forged and machined components for the automotive and non-automotive sector. The company manufactures a wide range of safety and critical components for passenger cars, commercial vehicles and diesel engines.