The recovery in Class 8 trucks orders in the North American market from November last year, too, can see reversal. From an initial sale estimate of 240,000 Class 8 trucks for CY20, there is apprehension that offtake will reduce by up to 15 per cent. The slowdown in European trucks and car sales, too, will hit the company’s revenues.
The other impact for the company is likely to be in the non-auto or industrial segment. Within this, the oil and gas segment, which accounted for about 18 per cent of revenues in 2018-19, has shrunk to a third. Crude oil prices had recently hit an 18-year low on worries that the impact of the pandemic could be prolonged and this would keep oil prices subdued. Bharat Forge
caters to shale gas firms in the US and muted oil prices have made operations unviable.
The muted outlook has weighed on the stock price, which fell 5 per cent on Tuesday, even as the front line indices were up by nearly 4 per cent. Positives for the stock, as compared to 2008, are low leverage and a more diversified business model, which may help when demand bounces back.
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