BofA update shows where active managers are putting money
Investing.com - UBS downgraded Bharat Forge (NSE:BFRG) Ltd. (NSE:BHFC) from Buy to Sell on Friday, while lowering its price target to INR1,215.00 from INR1,300.00.
The stock has gained 8% since April 2025, despite increasing risks to both domestic and export businesses outside of defense and growing global uncertainty related to tariffs, according to UBS.
The investment bank had previously reduced its earnings estimates for Bharat Forge by 13% for fiscal years 2026-2027, making the recent stock rally particularly concerning from a valuation perspective.
UBS noted that Bharat Forge’s valuation has now reached one standard deviation above its 10-year average, primarily driven by market optimism surrounding the company’s defense vertical, which UBS estimates will represent approximately 21% of revenue and EBITDA in both FY27 and FY28.
In response to the changing business mix, UBS has adjusted its valuation methodology from a blended approach to a sum-of-the-parts model, valuing the defense business at 25x EV/EBITDA (on par with pure-play defense companies) and the casting business at 12x EV/EBITDA, down from 16x previously.
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