Bharat Forge stock slumps nearly 7% after decline in Class 8 truck orders in North America

The stock, currently one of the top losers on the Nifty 500 index, opened at ₹1,579.95, marking a 4.55% drop from the previous close of ₹1,655.4 apiece. Bharat Forge shares slipped further to hit an intraday low of ₹1,538 apiece.

However, the stock recovered some of the early losses to close 6.43% lower at ₹1,549 apiece on the NSE.

Bharat Forge, a supplier specialising in defence products and auto components, is present in the North American Class 8 trucks market.

In July 2024, FTR Transport Intelligence reported a decline in Class 8 preliminary net orders, and said that the orders fell short of seasonal expectations, coming in at 12,400 units. This represents a 6% decline compared to the previous month and a 7% drop year-over-year. Over the past 12 months, Class 8 orders have accumulated to 2,72,900 units.

According to a report by FTR Transport Intelligence, the market is running slightly under replacement demand levels on a year-to-date (YTD) basis, with an average of 19,400 net orders per month. Orders averaged about 16,000 units from April to June 2024, but slowed to around 15,000 units in the last three months. This decline comes after a great start to the year, said FTR. This slowdown has resulted in a decrease in Class 8 truck build slot fulfilment. Despite the fact that orders are declining year over year for the second consecutive month, net orders for 2024 YTD are still up 18% from the previous year, which is indicative of the solid early-year performance, added FTR in the report.

A senior analyst at FTR Transport Intelligence noted that the commercial vehicle market experienced mixed performance in July. While vocational markets slightly underperformed compared to conventional markets, the overall situation remained steady.

“Despite stagnant freight markets, fleets continue to invest in new equipment, albeit at a slowing pace. Year-to-date order levels are just marginally below historical averages and seasonal expectations, and the market fundamentals remain relatively consistent based on these preliminary orders,” said the analyst. Further reductions in backlogs are anticipated once final Class 8 market indicators are released later this month, along with continued growth in already-record inventory levels.