Good prospects for Bharat Forge, but shares are undervalued

Leading engineering company Bharat Forge has broadened its revenue streams by entering new non-auto segments and markets, resulting in a decline in its share of the auto industry from 80 per cent (FY07) to 58 per cent by FY24. It is seeing strong traction in the defence sector. It has set up a team to work on advanced EV components. The diversifications have helped reduce cyclicality.

Bharat Forge’s revenue growth in Q1FY25 was led by defence as other segments saw weak demand. Foreign subsidiaries are showing gradual improvement. Standalone revenue, Ebitda (earnings before interest, taxes, depreciation,