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Bharat Forge’s Remarkable Share Price Surge: A Strategic Analysis for Investors

Bharat Forge’s stock price has surged by an impressive 36% in the past three months, prompting investors to ponder their next move.

In a remarkable feat, Bharat Forge’s stock recently achieved a 52-week high, marking a phenomenal 42% increase in value over the past year, significantly outpacing the Sensex. Market experts are bullish on the stock’s potential for further growth, albeit with a cautious note about potential profit-taking in the short term.

On a momentous trading day, Bharat Forge’s share price ascended nearly 2%, reaching an intraday high of ₹1,096 on the BSE. The stock opened at ₹1,086, surpassing the previous day’s close at ₹1,078.15, ultimately scaling to a fresh one-year peak of ₹1,096.

This impressive performance unfolds against the backdrop of Bharat Forge’s diversified portfolio, spanning across various sectors, including automotive, railways, defense, construction, mining, aerospace, marine, and oil and gas. The stock’s bullish trajectory over the past year has been nothing short of remarkable, boasting a 42% increase in value compared to the Sensex’s more modest 11% gain during the same period.

The stock’s meteoric rise in the last three months has been nothing short of astonishing, with a nearly 36% surge. This sustained momentum has captivated the attention of both investors and market observers, fueled in part by its significant presence in the defense sector, which currently enjoys a bullish sentiment.

Notably, Bharat Forge’s defense arm, Kalyani Strategic Systems Ltd, recently secured two substantial export orders totaling ₹850 crore. According to the company’s exchange statement, these orders, valued at EUR 93.87 million, will involve the delivery of parts and armored vehicle chassis over an 18-month period to friendly nations.

Furthermore, Bharat Forge’s performance in the June quarter has been robust, with a 34% year-on-year increase in consolidated net profit, reaching ₹213.73 crore. Consolidated revenue from operations stood at ₹3,877.27 crore, a significant uptick from ₹2,851.46 crore in the corresponding period the previous year.

Is There More Room for Growth?

The stock’s recent strong performance does raise the possibility of short-term profit booking. However, experts are optimistic about the stock’s upward potential at this juncture, suggesting that investors consider accumulating the stock during declines.

Gaurav Bissa, VP of InCred Equities, noted that Bharat Forge recently experienced a breakout, surging from around ₹920 to its current level of ₹1,100. He believes that while the stock may have achieved its short-term targets, the long-term outlook remains exceedingly favorable. The monthly charts indicate a breakout from an eight-year cup and handle pattern, with potential targets reaching around ₹1,800. Bissa advises investors to view declines toward ₹1,000 as buying opportunities for the long term. Short-term traders can ride the trend, setting a stop loss at ₹1,020.

In contrast, Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, observes that the stock currently appears overextended on the daily scale chart, trading well above its major exponential moving averages (21-50-100-200 day). Furthermore, the monthly bottom central pivot range hovers around ₹985. Patel suggests that as we move forward, some profit booking in Bharat Forge could be expected. For those already holding positions, he recommends booking partial profits, while those considering fresh longs should adopt a wait-and-watch approach.