BHARATGEAR - Bharat Gears

📊 NSE: BHARATGEAR 🏢 Auto Ancillaries 📅 Last Updated: 12/13/2025 19:27

💰 Financial Performance

Revenue Growth by Segment

Total operating income declined by 2.49% YoY to INR 650.05 Cr in FY25 from INR 666.67 Cr in FY24. Revenue for 9MFY25 was INR 472 Cr, representing a 4% YoY degrowth due to subdued demand in export markets and slower-than-expected recovery in domestic segments.

Geographic Revenue Split

Not explicitly disclosed in percentages, but the company reports a significant slowdown in export demand from the USA and Europe due to rising inflation and geopolitical conflicts, while domestic demand is driven by the Indian agricultural and off-highway vehicle sectors.

Profitability Margins

Net Profit Margin improved to 1.00% in FY25 from -1.00% in FY24. Operating Margin stood at 0.64% in FY25, a 7.25% decline from 0.69% in FY24. Return on Net Worth improved by 137.50% to 3.00% in FY25 from -8.00% in FY24, primarily driven by exceptional gains.

EBITDA Margin

PBILDT margin improved slightly to 3.76% (INR 24.28 Cr) in FY25 from 3.45% (INR 22.85 Cr) in FY24. The improvement was driven by effective cost-saving measures in material and overhead expenses despite a contraction in overall revenue.

Capital Expenditure

Maintenance capital expenditure is projected at INR 8-10 Cr per annum over the next 2-3 years. In FY25, proceeds from a land sale of INR 17.10 Cr were partially allocated to funding capital expenditure and prepaying debt obligations.

Credit Rating & Borrowing

CRISIL revised the long-term rating outlook to 'Negative' from 'Stable' while reaffirming 'CRISIL BBB-'. CARE Ratings reaffirmed 'CARE BBB-; Stable'. Interest coverage ratio stood at 1.42x in FY25, up 5.16% from 1.31x in FY24, but remains below the preferred threshold of 1.50x.

⚙️ Operational Drivers

Raw Materials

Steel forgings are the primary raw material used for gear manufacturing. While specific cost percentages per material are not disclosed, raw material and overhead cost-saving measures were credited for EBITDA margin stability.

Import Sources

Not specifically disclosed, though the company is exposed to global trade tariffs and international price volatility.

Key Suppliers

Not specifically named; however, the company procures from various steel forging entities and maintains a moderately working capital-intensive procurement cycle.

Capacity Expansion

Current capacity utilization is reported as low, leading to lower absorption of fixed costs. No major capacity expansion plans are currently underway as the company focuses on debt reduction and operational efficiency.

Raw Material Costs

Profitability is highly susceptible to volatility in raw material prices. The company employs cost-saving measures in materials to mitigate the impact of a 2.49% decline in revenue on operating margins.

Manufacturing Efficiency

Manufacturing efficiency is currently constrained by high operating leverage, with employee expenses accounting for 18-19% of revenue due to legacy hiring and trade union presence.

Logistics & Distribution

Not specifically disclosed as a percentage of revenue, but impacted by global geopolitical conflicts affecting export logistics to the USA and Europe.

📈 Strategic Growth

Expected Growth Rate

6.20%

Growth Strategy

Growth will be achieved through the prepayment of FY26 debt obligations using INR 17.10 Cr from land monetization to reduce finance costs, adding new customers in the agricultural and off-highway segments, and increasing the contribution from higher-margin export business as global markets recover.

Products & Services

Automotive gears, automotive components, and transmission parts for tractors, construction equipment, and commercial vehicles.

Brand Portfolio

Bharat Gears (BGL).

New Products/Services

The company is focusing on new customer additions in the domestic agricultural and off-highway vehicle segments to offset export slowdowns.

Market Expansion

Targeting expansion in domestic agricultural and off-highway vehicle markets to mitigate the impact of the 13.91% decline in scale seen in previous cycles.

Market Share & Ranking

Not specifically disclosed, but described as having an 'entrenched market position' in the auto ancillary industry.

🌍 External Factors

Industry Trends

The auto component industry is experiencing a shift toward automation and digitalization. The sector is currently cyclical, with recovery expected in FY26 driven by infrastructure spending and private CAPEX in India.

Competitive Landscape

Operates in a competitive auto ancillary market with pressure from both domestic players and global trade tariff shifts.

Competitive Moat

The moat is built on 50+ years of operational track record, experienced promoters (Kanwar family), and established relationships with major OEMs, providing a stable but cyclical competitive advantage.

Macro Economic Sensitivity

Highly sensitive to GDP growth (projected at 6.2% for FY26) and inflation in Western markets, which led to a significant slowdown in export demand in FY25.

Consumer Behavior

Demand is shifting toward more efficient agricultural machinery and construction equipment, influenced by government infrastructure spending of INR 11.21 Lakh Crore.

Geopolitical Risks

Ongoing Russia-Ukraine and Israel-Hamas conflicts have directly caused a slowdown in export offtake and disrupted global supply chains.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to Indian Accounting Standards (Ind AS) and SEBI Listing Obligations. Manufacturing is subject to standard automotive industry quality and safety regulations.