Ashish Kacholia Portfolio: Balu Forge Industries’ share price is likely to rally in the long term, driven by the company’s strong sales growth, according to Nuvama brokerage firm. Balu Forge Industries’ share price has declined nearly 20% since the beginning of 2025, which offers a good entry point for investors, noted Nuvama in its latest report.

The BSE Smallcap company is likely to get the benefit of boosted realisation and volume growth in the financial year 2025-26. In its report, Nuvama noted that Balu Forge Industries’ revenue and profit after tax (PAT) CAGR is likely to remain at 35% between FY25-28.

Balu Forge shares were trading 0.24% higher at Rs 639.15 per share on BSE on Thursday at 1:40 pm with a market capitalisation of Rs 6,994.98 crore.

Balu Forge Share Price Recommendation

Balu Forge shares may witness an upside of 30% in long term, underlined Nuvama, initiating a ‘Buy’ rating for the stock. “We expect a potential re-rating driven by potential sales growth which we forecast to grow by 34% CAGR over next two years. We initiate coverage with a ‘BUY’ rating and a TP of INR790, an upside of 30%,” noted Nuvama.

Capacity Expansion To Address Supply Crunch in Europe Amid Russia-Ukraine War

The company is working to actively boos its capacity to utlise the opportuniy in Europe amid Russia-Ukraine conflict. The brokerage noted that Europe is facing supply crunch of forging components as Ukraine used to be a dominant supplier of these items earlier. Amid the onging Ukraine conflict with Russia, Balu Forge Industries and other domestic forging firms are aggressively adding capacity over last two years to tap the demand from Europe.

“Balu Forge has been one of the frontrunners expanding its machining capacity to 32,000mt in FY25 from 18,000mt in FY24. The management is adding a new greenfield plant with aim to increase machining capacity to ~80,000mt over the next 12-18 months, of which some expansion is already live leading to total capacity of ~45,000mt as of May,” stated Nuvama.

Further addition of specialised machines like 16t and 25t pneumatic hammer, etc will bring Balu Forge Industries in the list of India’s top largest domestic players. The company is also looking to up its game in the defence industry by setting up a production capacity of 3.6 lk artillery shells. The unit was expected to go live in the first half of FY25, according to Nuvama.

Balu Forge Current Market Price a Lucrative Entry Point

Balu Forge’s stock value has declined 19.27% year to date (YTD). However, the company’s scrip value has increased nearly 109% in the last one year. Balu Forge stock touched its 52-week-high mark of Rs 890 per share on BSE on 24 September, 2024.

“The stock has fallen 20% from the start of 2025 and 25% from its peak in October 2024 led by a wider sell-off in Indian equities and macro weakness. As the new capacity comes up, Balu Forge will start selling bigger and heavier machined components. This should drive re-rating of the stock especially as the sales and EBITDA grows by 30% CAGR,” added Nuvama in its report.