Super 7 Picks - January 2016

amit.paprika

RR0201201688E62

2nd Feb ,

Bharat Forge Ltd

Industrial Products

Buy

B P

W E A L T H

Technical View (Weekly Chart)

Intermediate Trendline Surpassed

Execution Data

Target (Rs) 970

Stop loss (Rs) 820

Buying Range (Rs) 880-860

Last Close Price (Rs) 888

% change Weekly 3.19

Weekly Oscillator Direction

13 WMA Upwards

21 WMA Downwards

50 WMA Downwards

Reversed after taking Support from Downsloping Trendline

RSI

MACD

Buy Mode

Buy Mode

RSI Surpassed Downsloping Trendline

Source: Falcon, BP Equities Research

Technical View

The stock has reversed after taking support from the down sloping trend line. Price has consolidated

around the lower trend line for past couple of months and has recently surpassed the intermediate

trend line which is a bullish signal for short term trend. RSI has surpassed a down sloping trendline

which suggests a bullish reversal and compliments the bullish view of price. We recommend to BUY

BHARATFORG in the range of 880-860 with a stop loss of 820 for the target of 970 in short term.

Investment Rationale

Domestic economy, new orders from international markets are key for Industrial segment

The company supplies its forged products to Oil & Gas companies, construction & mining sectors,

etc. Bharat Forge has diversified its presence more in industrial segment and expects significant

scope of improvement in sub-segments like defense, aerospace, etc. With expected revival in domestic

economy, Government’s thrust & initiatives like ‘Make in India’ and new orders win, we expect

Industrial segment to perform well. The company has signed a multi year contract with Boeing to supply

pre-machined titanium forging

Auto business provides a strong sign of recovery

Bharat Forge is an established player having presence in domestic and international Commercial

vehicle OEMs for supplying Chassis and power train parts. In recent past, domestic CV industry has

shown uptick in volume and the demand outlook for North American CV companies is also positive.

Moreover, European CV market is showing gradual improvement therefore we expect company’s

standalone Auto business to show strong recovery going forward.

Outlook

The company has reduced its dependence on cyclical commercial vehicle segment and also diversified

its clientele. We expect strong volume growth in Auto segment on the back of revival in domestic

and North American commercial vehicle industries as well as in Industrial segment based on expectation

of higher growth in domestic economy, Make In India initiative and new order win. The profitability

of the company is significantly influenced by capacity utilization and we expect it to improve with

higher volume.

Sector Outlook

Neutral

Stock

BSE code 500493

NSE Symbol

BHARATFORG

Bloomberg

BHFC IN

Reuters

BFRG.BO

Key Data

Nifty 7,963

52WeekH/L(Rs) 1,363/733

O/s Shares (Rs mn) 233

Market Cap (Rs bn) 207

Face Value (Rs) 2

Average volume

3 months 1,050,060

6 months 1,036,927

1 year 1,099,496

3

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