Initiate with a BUY: We set a target price of INR 720 at 32x FY23E EPS as we expect earnings growth to recover over FY22-23E. We value the stock at its average historic long-term P/E multiple to factor in (1) the pick-up in the business cycle and (2) emerging opportunities across defence and the PV segments. Key risks: a sharp increase in commodity input prices and delayed orders in defence; steel price increase could lead to margin volatility in the near term. We initiate on Bharat Forge with a BUY rating as the company is expected to benefit from its wide-ranging capabilities and near-term cyclical pick-up in CV sales. The company is diversifying its mix by increasing focus on passenger car components as well as increasing capacities in aluminium forgings (for light-weighting). To acquire new skills, it is actively investing in startups and JVs across electric vehicles/defence segments. We believe that the initiatives in the defence segment are likely to materialise (after several years) as Indias defence-based capital expenditure has risen by ~20% in FY21 and the government is aggressively pushing for localisation.