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INVESTMENT INSIGHTS

Check Before You Invest : Balu Forge Industries Ltd

BSE: 531112 NSE: BALUFORGE ISIN: INE011E01029
  |   Sector:  Automobiles   |   Industry:  Forgings

Snapshot

Q.1 Which industry/sub-sector does Balu Forge Industries Ltd belong to?
Balu Forge Industries Ltd belongs to the Automobiles sector, operating specifically within the Forgings segment.
Q.2 Is Balu Forge Industries Ltd a good quality company?
Balu Forge Industries Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Balu Forge Industries Ltd undervalued or overvalued?
Balu Forge Industries Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 39.99 49.43
Price to Book 4.21 6.18
Price to Sales 9.08 8.12
EV to EBITDA 26.98 32.23
Q.4 Is Balu Forge Industries Ltd a good buy now?
Balu Forge Industries Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Balu Forge Industries Ltd?
Balu Forge Industries Ltd revenue growth is 54.2% for FY-2025, which is below its 5-year CAGR of 395.68%, indicating slower growth.

Q.2 Gross Profit margin of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Gross profit margin which is the profit after deduction of direct costs, is 31.3% for FY-2025, which is above its 5-year median of 16.7%, indicating increasing margins.

Q.3 Operating Profit Margin of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 29.22% for FY-2025, which is above its 5-year median of 17.38% indicating increasing margins.

Q.4 Net Profit Margin of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Net Profit Margin is 22.43% for FY-2025, is above its 5-year median of 11.89%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 31.3 16.7
Operating Profit Margin (%) 29.22 17.38
Net Profit Margin (%) 22.43 11.89

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Return on Asset is 14.83%, which is above its 5-year historical median of 13.16%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Return on capital employed is 25.14% for FY-2025, which is in line with its 5-year historical median of 25.14%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 13.5%, indicating value creation.

Q.7 Return on Equity (ROE) of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Return on equity is 19.79% for FY-2025, which is in line with its 5-year historical median of 19.79%, indicating the business is making similar use of its shareholders capital.

Q.8 Cash conversion cycle of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Cash conversion cycle is 103 days, in line with its 5-year historical median of 103 days, indicating stable working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.66 0.85
ROE (%) 19.79 19.79
ROCE (%) 25.14 25.14
Cash Conversion Cycle 103 days 103 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Debt-to-Equity ratio is 0.04, which is lower the industry average of 0.54, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Balu Forge Industries Ltd?
Balu Forge Industries Ltd Debt to cash flow from operations is 0.24, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Balu Forge Industries Ltd?

Q.1 Promoter shareholding and pledge status of Balu Forge Industries Ltd?
Promoters hold 54.39% of the Balu Forge Industries Ltd, with 1.40% of their stake pledged, indicating low pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Balu Forge Industries Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Balu Forge Industries Ltd vs industry peers?
Balu Forge Industries Ltd revenue CAGR is 395.68%, compared to the industry median CAGR of 10.29%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 54.2 10.3
Gross Profit Growth (%) 110.1 25.5
Operating Profit Growth (%) 90.2 18.7
Net Profit Growth (%) 100 27.4
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.66 0.92
ROE (%) 19.79 14.91
ROCE (%) 25.14 14.66
Cash Conversion Cycle (days) 103.07 112

Valuation & price assessment

Q.1 Stock return of Balu Forge Industries Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 26.8% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 26.8% 16% 67.2% -24.1%
Q.2 Valuation ratios of Balu Forge Industries Ltd vs historical?
The current P/E ratio of 39.99 is lower than its historical median of 49.43, indicating that the stock is trading below its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 39.99 49.43 33.04
Price to Book 4.21 6.18 3.77
Price to Sales 9.08 8.12 1.87
EV to EBITDA 26.98 32.23 16.91

Check more companies

1. Happy Forgings
2. Ramkrishna Forgings
3. Balu Forge Inds.
4. MM Forgings
5. Amic Forging
6. Tirupati Forge
7. Kalyani Forge
8. Krishanveer Forge
9. Hilton Metal Forging
10. Samrat Forgings

Check trending companies

1. Blue Star Ltd.
2. Eicher Motors Ltd.
3. PG Electroplast Ltd.
4. GAIL (India) Ltd.
5. The Phoenix Mills Ltd.
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