Financial Daily from THE HINDU group of publications
Saturday, Nov 22, 2003
Financial Daily from THE HINDU group of publications Saturday, Nov 22, 2003 |
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Markets
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Stock Markets Bharat Forge stocks gaining strength Deeptha Rajkumar
RUMOURS of a possible overseas acquisition dogged the stock of Bharat Forge Ltd, due to which the counter hit a new intra-day high of Rs 615 on the Bombay Stock Exchange on Friday. The stock has appreciated by almost 249 per cent from a low of Rs 174 on November 22, 2002 to its current close of around Rs 607 (BSE). Brokers said that speculation that the company is likely to make an announcement regarding the acquisition over the next few days, sustained market interest in the counter. Company officials were, however, not available for comment. Market sources maintain that the stock has been gaining strength ever since it bagged a slew of orders starting from two new export orders from Ford Motor Co and Daimler Chrysler as a supplier of machined components for their passenger car business, to an order to supply control arm forging to an Australian car company plus the order from Dana of the US. Analysts continue to remain bullish on the stock as it is expected to deliver strong growth over the next two years, particularly given its aggressive focus on the global passenger car segment. "The company is likely to make a profit of Rs 124 crore for FY04 and is looking at a profit of Rs 160-170 crore for FYO5. PE-wise also it is not very expensive given its export prospects. We are confident the growth story will continue for the next two years,'' Mr Dilip Bhut, head of research at Prabhudas Liladher, said. According to Mr Bhut, given the rate at which the company is growing it is heading towards an 80 per-cent-plus capacity utilisation. "In this backdrop, there is very little scope for it to grow on its own. It could either go in for expansion or look at an overseas or domestic acquisition. And given that currently they are the largest player in the domestic market, there is a possibility that it could look at an overseas acquisition,'' he reasoned. Yet sceptics believe that while the stock will remain a market performer, it is unlikely to outperform the market from its current levels. The stock ended the day at Rs 607.10 on the BSE up 2.94 per cent with around 26,561 shares traded.
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