BHARATFORG - Bharat Forge

📊 NSE: BHARATFORG 🏢 Castings & Forgings 📅 Last Updated: 12/13/2025 19:26

💰 Financial Performance

Revenue Growth by Segment

In FY24, Industrial revenue grew 30.8%, Passenger Vehicles (PV) grew 20.1%, and Commercial Vehicles (CV) grew 7.6%. However, H1FY25 saw a slowdown with Industrial growing 17%, while PV declined 4.3% and CV declined 4.7% due to global market challenges. Standalone revenue for Q2 FY26 was INR 1,946.9 Cr, a 13.3% YoY decrease.

Geographic Revenue Split

As of FY24, the consolidated revenue split was 35.3% from Europe, 25.1% from the USA, and 24.4% from India. Indian operations are highly export-oriented, with 55-60% of revenue derived from international markets.

Profitability Margins

Consolidated PBILDT margins stabilized between 12-15% from FY20-24. Standalone PBILDT margins for FY24 were 27.63% compared to 25.24% in FY23. Q2 FY26 standalone EBITDA margin stood at 28.0%, showing resilience despite revenue drops.

EBITDA Margin

Consolidated EBITDA margin for H1 FY26 was 17.6%. Standalone EBITDA for Q2 FY26 was INR 544.6 Cr (28.0% margin), which is a 15.9% YoY decrease from INR 647.7 Cr in Q2 FY25.

Capital Expenditure

The company completed greenfield capex in the USA for aluminum forgings in 2022. It has an enabling approval to raise up to INR 2,000 Cr via debt and NCDs for organic and inorganic growth in India.

Credit Rating & Borrowing

The company maintains a Stable outlook from CARE Ratings. It raised INR 1,650 Cr through a Qualified Institutional Placement (QIP) to repay/pre-pay debt. A total debt/OPBITDA above 2.5x would trigger a downgrade.

⚙️ Operational Drivers

Raw Materials

Steel and Aluminum are the primary raw materials. Steel forgings account for 56% of overseas manufacturing revenue (INR 1,500.2 Cr in H1 FY26), while Aluminum forgings account for 44% (INR 1,197.2 Cr in H1 FY26).

Import Sources

Not explicitly disclosed, but overseas operations in North America and Europe suggest localized sourcing for those regions to mitigate logistics risks.

Capacity Expansion

The company has ramped up greenfield aluminum forging capacity in North America to target the lightweighting market. It is also integrating the recently acquired AAM India (K Drive Mobility) business.

Raw Material Costs

Input costs for overseas operations saw a sharp jump in FY23, leading to a 552 bps drop in operating margins. The company uses price hikes and cost optimization to manage these fluctuations.

Manufacturing Efficiency

Standalone sale tonnage for Q2 FY26 was 56,457 tons, an 11.9% YoY decline. The company is focusing on engineering transformation and digital enablement to improve efficiency.

Logistics & Distribution

The global nature of the business makes it susceptible to logistics disruptions; the company is optimizing its supply chain to ensure transparency and movement of goods.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth will be driven by the Defence segment, which has an order book of INR 9,467 Cr as of H1 FY26. The company is also 'doubling down' on India through an INR 2,000 Cr fund for acquisitions and organic expansion, and ramping up aluminum forging for the global EV/lightweighting market.

Products & Services

Artillery systems (indigenous), steel and aluminum forgings, crankshafts, front axle beams, steering knuckles, and components for CV, PV, and Industrial segments (Oil & Gas, Aerospace, Rail).

Brand Portfolio

KSSL (Kalyani Strategic Systems Ltd), K Drive Mobility (formerly AAM India), KPTL.

New Products/Services

Indigenously designed artillery systems for export (first exported in August 2023). Defence revenue rose from INR 410 Cr in FY23 to INR 1,561 Cr in FY24.

Market Expansion

Targeting untapped sectors through OEM supply chain future-proofing and expanding the Indian manufacturing footprint which registered INR 2,746 Cr revenue in Q2 FY26.

Strategic Alliances

Acquisition of AAM India (American Axle India Manufacturing) to form K Drive Mobility; transfer of defence assets to wholly-owned subsidiary KSSL.

🌍 External Factors

Industry Trends

The industry is shifting toward lightweighting (aluminum) and supply chain de-risking. Bharat Forge is positioning itself by expanding aluminum forging capacity and diversifying into Defence and Aerospace.

Competitive Landscape

Competes with global forging players and domestic auto-component manufacturers; diversifying into Defence to reduce reliance on the cyclical CV segment.

Competitive Moat

Moat is built on advanced forging technology, a massive executable defence order book (INR 5,905 Cr), and deep integration with global OEMs, making it difficult for competitors to displace them in critical supply chains.

Macro Economic Sensitivity

Highly sensitive to the US Class 8 truck cycle and global automotive demand. A 16% drop in North American revenues significantly impacted Q2 FY26 performance.

Consumer Behavior

Shift toward EVs and lightweight vehicles is driving demand for aluminum components, where the company has invested in greenfield capacity.

Geopolitical Risks

Global operations are exposed to trade disruptions and exigencies in the movement of goods across borders.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act 2013, SEBI (PIT) Regulations 2015, and various manufacturing standards. Defence operations are governed by specific indigenization and export norms.

Environmental Compliance

The company obtained limited assurance on BRSR Core Indicators from KPMG on a standalone basis.

Taxation Policy Impact

Consolidated taxation for the period was INR 5,425.50 Cr against a PBT of INR 14,558.25 Cr.

Legal Contingencies

There are no significant or material orders passed by regulators or courts impacting the going concern status. No proceedings are pending under the Insolvency and Bankruptcy Code, 2016.