Bharat Forge has received a ‘Buy’ rating from Jefferies with a price target of Rs 2,150, indicating a 30% upside potential. The brokerage builds its case on a strong defence order pipeline, a recovery in export markets led by US trucks, and a broader push into high-value segments across land, naval and aerospace systems.
Defence revenues, which rose sharply in recent years, are expected to double again over the next two years, while export prospects are improving with a rebound in North American truck orders and better demand from global industrial clients. Jefferies also notes that earnings growth is likely to pick up meaningfully after a slower phase, supported by both domestic and export businesses.
Jefferies on Bharat Forge: Defence expansion gathers pace across segments
Jefferies sees Bharat Forge moving well beyond its earlier focus on artillery systems into a broader defence play. The report lays out how the company is building capabilities across land systems, naval technologies, aerospace components and ammunition.
The brokerage points out that Bharat Forge has already developed multiple artillery platforms and is scaling manufacturing capacity, while also tapping opportunities in armoured vehicles and other land-based systems. On the naval side, the company is investing in underwater technologies and has begun securing orders in that segment.
“Bharat Forge is significantly expanding its defence capabilities from guns to a wide range of land, naval and aero equipment as well as ammunition,” Jefferies said.
The report also notes that the company has entered partnerships with global players and domestic shipbuilders, strengthening its position in upcoming defence programmes. This wider presence is expected to open up a larger addressable market over time.
Jefferies on Bharat Forge: Order book strength supports future revenue visibility
A key part of the investment case rests on the order book, which has expanded sharply in recent quarters. According to the report, the company has secured sizeable domestic orders for artillery systems and small arms, providing a base for future revenue growth.
Jefferies highlights that defence revenues have already seen a steep rise and are set for another leg up as execution of these orders picks up. The brokerage expects defence to contribute a higher share of overall revenue in the coming years.
“Order book has doubled with domestic orders for artillery guns and small carbines, providing strong visibility for defence revenues,” the brokerage says.
The report adds that after a period of flat revenues, growth is expected to accelerate as new orders move into the execution phase.
Exports outlook improves with US recovery
Beyond defence, Jefferies sees a turning point in Bharat Forge’s export business. The brokerage points to a sharp rebound in North American truck orders, which had been weak earlier, as an early sign of recovery.
The report also notes improving prospects for industrial exports, driven by better revenue outlook for key global clients such as Caterpillar and Cummins. Charts on page 3 and 4 of the report show a strong pickup in truck orders and improving forecasts for these companies.
“US truck orders are witnessing a sharp rebound while industrial exports could also see a revival with improving outlook for key customers,” Jefferies adds.
This recovery is expected to support overall revenue growth, alongside the ramp up in defence.
Jefferies on Bharat Forge: Earnings growth set to accelerate after slow phase
Jefferies expects earnings momentum to strengthen meaningfully over the next two years after a relatively moderate period. The brokerage estimates that earnings per share growth will pick up sharply, supported by operating leverage and higher contribution from defence.
The report indicates that earnings growth could move from a low double digit pace to a much stronger trajectory as both domestic and export segments improve.
“We expect earnings growth to accelerate meaningfully over the next two years driven by defence traction and export recovery,” the brokerage says.
The brokerage also points out that margin stability is likely, which should support profitability even as revenues scale up.
Jefferies on Bharat Forge: Valuation support growth visibility
Jefferies acknowledges that Bharat Forge trades at a premium to several auto component peers but argues that the valuation is justified given its positioning across defence and industrial segments.
Charts on page 5 of the report compare the company’s valuation multiples with peers and industrial companies, showing that growth expectations are higher for Bharat Forge.
“Valuations are reasonable when compared with industrial stocks given the improving operational outlook,” Jefferies says.
The brokerage bases its target price on forward multiples, factoring in expected earnings growth and improved business mix.
Jefferies on Bharat Forge:Risks remain but outlook constructive
The report does flag some near term risks, including geopolitical factors that could affect energy supplies and production, as well as the pace of recovery in export markets.
At the same time, Jefferies maintains that the overall direction remains favourable, with multiple growth drivers in place across segments.
“While near term risks remain, we see multiple tailwinds for exports business and continued expansion in defence,” the brokerage adds.
This balance between risks and opportunities forms the basis for retaining the ‘Buy’ call.
Conclusion
Jefferies builds its case on Bharat Forge around a combination of defence scale up and improving global demand. The company is moving into a wider set of defence products while also benefiting from a recovery in export markets, particularly in North America.
The order book provides visibility, while new segments add optionality. Near-term risks remain, but the broader trajectory, as outlined in the report, stays firmly positive.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
