Bharat Forge Initiates ₹1,650 Crore QIP: What Investors Need to Know

Bharat Forge Ltd has initiated a Qualified Institutions Placement (QIP) of equity shares, aiming to raise up to ₹1,650 crore, according to a stock exchange filing made on Wednesday evening. The company has established a floor price of ₹1,323.54 per share for the equity issuance.

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Reports from CNBC-TV18, citing unnamed sources, suggest that the indicative issue price for the equity shares falls between ₹1,290 and ₹1,320 per share. This price range reflects a discount of 4.2% to 6.4% relative to the stock’s previous closing price.

On Wednesday, ahead of the equity issue announcement, Bharat Forge share price rose by more than 2%, closing at ₹1,378. Over the past year, the stock has gained approximately 18%, giving the company a market capitalization exceeding ₹64,000 crore.

The QIP received approval from Bharat Forge’s Investment Committee on Wednesday, following prior authorizations by the board and shareholders via a postal ballot on November 8, 2024. The floor price has been calculated in accordance with SEBI's pricing formula under the ICDR Regulations. The company retains the option to offer a discount of up to 5% on the floor price, as permitted by the shareholder resolution.

The preliminary placement document is expected to be filed with the BSE and NSE later today. In compliance with its Insider Trading Prevention Code, Bharat Forge has kept its trading window closed since September 25, 2024.

The QIP follows the company’s modest financial performance for the September quarter, where revenue was relatively flat at ₹2,246 crore compared to ₹2,249 crore in the same period last year. However, net profit increased by 4.4% to ₹361.1 crore. Bharat Forge has indicated optimism for a stable second half of the fiscal year, with a focus on enhancing revenues and profitability across its subsidiaries.

Investors are likely to keep Bharat Forge’s stock under close watch on Thursday, December 5, following a notable uptick in Class 8 truck orders in North America. November saw 33,500 units ordered, marking an 11-month high. This is the first time in 2024 that monthly Class 8 truck orders have surpassed the 30,000-unit threshold.

Despite this growth, year-on-year orders were down by 9%, although month-on-month comparisons showed an 18% increase. Kenny Vieth, President and Senior Analyst at ACT Research, remarked, “While the industry is in the early stages of building its 2025 backlogs, the strong seasonal orders in November have done little to narrow the backlog gap compared to last year.”

Bharat Forge, which operates as a supplier in the North American Class 8 truck market, continues to monitor these developments. Speaking with CNBC-TV18 on November 14, Bharat Forge Chairman and MD Baba Kalyani noted that demand for trucks in North America remains strong.