High FPIs & Mutual Fund-Backed Large Cap Stock Okays 125% Dividend: Buy?

A large-cap company in the industrial sector is Bharat Forge Ltd. Among India's top forging firms is Bharat Forge. Bharat Forge has a 16.60% FII/FPI stake and a 19.84% mutual fund stake as of the December 2023 quarter. The firm has released its Q3FY24 financial results and announced a 125% dividend for FY24.

Bharat Forge Dividend

The Board of Directors "Declared an interim dividend of Rs. 2.50 per equity share of the face value of Rs. 2 each of the Company (at the rate of 125%). The interim dividend shall be paid on or before Tuesday, March 12, 2024 to the equity shareholders of the Company, whose names appear in the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Friday, February 23, 2024 which is the Record Date fixed for the purpose," said Bharat Forge in a stock filing.

Bharat Forge Financials

Consolidated net profit for the quarter, according to the company, was Rs 254.45 crore, up 223 per cent from Rs 78.71 crore in the same period the previous year. Revenue jumped by 15.7% to Rs 3922.96 crore in Q3FY24 from Rs 3389.95 crore in Q3FY23. EBITDA margins climbed to 28.5% as EBITDA jumped 30.9% to Rs 645 crore during the quarter ended 31st December 2023. The balance sheet is still in excellent shape, with around Rs 1,000 crores in cash on books (net of long-term loans). The company won a new business of Rs 550 crores in the quarter in the following sectors: automotive, industrial, defense, aerospace, and castings (aluminium & ferrous).

"In the overseas operations, we have been able to achieve improvement in operational parameters at the Aluminum business in Europe and the same is expected in the US plant soon. We continue to work on creating a sustained path to profitability for the overseas business driven by a combination of achieving profitability in the aluminum business and product/manufacturing optimization in the steel business, all expected to materialize in the next 12 - 18 months. Looking ahead in the Q4 & further into FY25, we expect the growth momentum to moderate in both Domestic & Export market across industries. Our endeavor will be to outperform the market driven by our diversified business mix," said B.N. Kalyani, Chairman & Managing Director of the company.

Bharat Forge Share Price Target

Deven Mehata - Equity Research Analyst at Choice Broking said BHARATFORG, presently trading at 1085 levels, has recently experienced significant profit booking, with a correction exceeding 18% in the last two trading sessions. The stock now hovers around a crucial support level near 1060, coinciding with its 200-day Exponential Moving Average (EMA). A breach of this support could potentially lead the stock towards the next significant support at 1010.

This correction presents a prospective buying opportunity for long-term investors seeking entry points in the current market conditions. It is essential to monitor the support levels closely for signs of stabilization or potential breakdown.

On the upside, BHARATFORG encounters a formidable resistance at 1135 levels, a crucial consideration for short to medium-term traders. Strategic trade planning around this resistance level is advised.

The Momentum indicator, Relative Strength Index (RSI), is noteworthy as it has descended to 32.22, approaching the oversold zone. This suggests a potential rebound in the stock, emphasizing the importance of monitoring RSI levels for potential shifts in market sentiment.

In conclusion, BHARATFORG's recent correction presents both challenges and opportunities. Long-term investors can consider this a potential entry point, while traders should be cautious around the noted resistance levels and track RSI for signs of a reversal.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.