PSU defence stock jumps 5% after receiving CCI approval for ₹7,000 Cr defence contracts

A leading PSU stock saw a 5 percent surge after securing approval from the Competition Commission of India (CCI) for defence orders worth Rs.7,000 crore. This significant development marks a major milestone for the company, boosting investor confidence and driving growth prospects in the defence sector.

Price Movement

During Wednesday’s trading session, shares of Bharat Forge Ltd reached an intra-day high of Rs.1,202.00 per share, rising 6 percent from its previous close of Rs.1,136.00 per share. However, the stock declined before closing at Rs.1,191.50 each. Over the past five years, the shares have delivered over 180 percent returns.

What Happened

Bharat Forge Ltd. received a significant boost as the PM-led Cabinet Committee on Security cleared a Rs. 7,000 crore deal to acquire advanced towed artillery gun systems (ATAGS) for the Indian Army. The contract includes 307 howitzers with a strike range of 45-48 km and 327 gun-towing vehicles for 15 artillery regiments. The agreement is expected to be finalized next week. 

Developed by DRDO, the 155mm/52-caliber ATAGS will be produced jointly by Bharat Forge and Tata Advanced Systems, with Bharat Forge manufacturing 60% of the guns as the lowest bidder. The Army plans to increase its order in the future, aiming to induct a total of 1,580 guns, including more advanced versions.

Export Performance

Bharat Forge’s export performance for Q3 FY25 highlights a regional distribution of revenue. The Americas dominate with the highest share at Rs.854.0 crores, followed by Europe at Rs.233.3 crores, and Asia at Rs.63.7 crores. Overall, Bharat Forge’s total exports for Q3 FY25 totaled Rs.1,151.0 crores.

The company operates manufacturing facilities in India, Germany, and Sweden, positioning itself as a global player. In India, Bharat Forge has production units in locations such as Mundhwa, Satara, Baramati, Chakan, and Nellore. It is recognized for housing the largest single-location forging facility in the world.

Also read: Stock jumps 9% as DGTR reviews anti-dumping duties on chemicals from Saudi Arabia

Earnings Report

According to its latest financial update, Bharat Forge reported consolidated revenue of Rs.3,476 crores in Q3 FY25, showing a 10 percent decline from Rs.3,866 crores in Q3 FY24. The company also saw a drop in net profit, which fell to Rs.213 crores, marking a 16.1 percent decrease from Rs.254 crores in the same period last year.

Ratio Analysis

The company has a Return on Capital Employed (ROCE) of 13.71 percent and a Return on Equity (ROE) of 14.3 percent. Its Price-to-Earnings (P/E) ratio stands at 51.45, higher than the industry average of 40.36. Furthermore, the company maintains a current ratio of 2.72, a debt-to-equity ratio of 1.06, and an Earnings Per Share (EPS) of Rs.20.68. 

Target Recommendation

JP Morgan, a prominent brokerage firm, has recommended a “Buy” call on Bharat Forge with a target price of Rs.1,270.00 per share, indicating an upside potential of 20 percent from current market price.

Business Overview

Bharat Forge, established by Nilkanthrao A. Kalyani on June 19, 1961, is headquartered in Pune, Maharashtra, and serves as the flagship company of the Kalyani Group. Bharat Forge produces a wide array of components, including front axle beams, steering knuckles, connecting rods, crankshafts, and aluminum castings.

Written by – Siddesh S Raskar

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