Bharat Forge (BHARATFORG)

FairStock Score: 38/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• 5-year revenue CAGR of 19% demonstrates long-term growth capability and franchise strength.
• Piotroski F-Score of 8/9 indicates strong recent financial health across profitability, leverage, and efficiency.
• Altman Z-Score of 4.47 suggests a low near-term bankruptcy risk.
• Promoter holding of 44.07% aligns management incentives with minority shareholders.
• ROE and ROCE both above 12%, showing reasonable capital discipline for an auto-component manufacturer.

Concerns

• Valuation is extremely rich: P/E of 78.25, P/B of 9.68, and EV/EBITDA of 168.17 leave no margin of safety.
• Sales growth of only 4.55% is far below profit growth, suggesting earnings quality is weaker than headline profit numbers imply.
• Free cash flow is negative at ₹-168 Cr, so reported profits are not converting into cash.
• Dividend yield of 0.44% offers negligible income support for retail investors.

AI Analysis

When I look at Bharat Forge, I see a capable, established Indian forging and auto components player, but the numbers today test my discipline. The business has grown meaningfully over time—5-year revenue CAGR of 19% —and current profitability is decent, with ROE of 12.20% and ROCE of 12.18%. Financial health appears sound at first glance: Altman Z-Score of 4.47 signals no bankruptcy stress, Piotroski F-Score of 8/9 shows solid recent fundamentals, and promoter holding of 44.07% aligns owners with public shareholders. Debt/equity of 0.71 is manageable for a capital-intensive cyclical. But I cannot ignore valuation. At ₹1,873.40, the stock trades at 78.25 times earnings, 9.68 times book value, and an absurd EV/EBITDA of 168.17. The Graham Number of ₹324.03 sits far below the market price. I see no margin of safety. While profit grew 26.14%, sales growth was only 4.55%—profits are outrunning tangible demand, and free cash flow is negative at ₹-168 Cr. Dividend yield of just 0.44% means the shareholder must depend entirely on price appreciation. A PEG of 7.79 tells me the market has already priced in many years of flawless growth. This looks like a good cyclical business at a very demanding price. In keeping with Graham, price is what you pay, value is what you get. I would not purchase Bharat Forge here; I would wait for a meaningful correction, evidence of durable cash flow, and sales growth that justifies the multiple.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer