Bharat Forge Limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Bharat Forge reported a mixed Q1 FY26, with standalone revenue down 2.7% and EBITDA down 6.5% due to global automotive disruptions and tariff impacts. However, consolidated revenue grew 1.5% QoQ, driven by improved overseas profitability and reduced losses in Kalyani Powertrain, with consolidated EBITDA reaching 17.4%. The company secured ₹850 crores in new business and expects the American Axle acquisition to add ₹1,000 crores to the topline from Q2 FY26, while navigating ongoing tariff uncertainties and a weaker Q2.

Highlights

  • Consolidated Q1 revenue at ₹3,909 crores, up 1.5% QoQ, driven by better profitability in overseas business and reduced losses in Kalyani Powertrain.

  • Consolidated EBITDA improved to ₹682 crores, achieving a 17.4% margin.

  • New business worth ₹850 crores secured in Q1, including Bharat Forge (₹429 crores), Defense (₹269 crores), and JSA (₹149 crores).

  • US aluminum business reported a second consecutive quarter of positive EBITDA with 6.1% margins, driven by operational efficiencies and better utilization (70%).

  • Aerospace business expected to continue 20%+ annual YoY growth.

Concerns

  • Standalone Q1 revenue was ₹2,105 crores, down 2.7% due to global automotive disruption, emission norm pause, and aerospace seasonality.

  • Standalone EBITDA was ₹588 crores, down 6.5% due to low utilization and different product mix.

  • Absorbed ₹14 crores in tariff-related expenses in Q1.

  • Q2 expected to be weaker due to US exports, potentially marking a low for the cycle.

  • JSA experienced a seasonally weak quarter, aggravated by tariff uncertainty and slowdown in US renewable energy.

  • Ongoing tariff-related uncertainty impacting market outlook and order inflows.

Key financials

  1. Standalone Revenue ₹2,105 Cr -2.7%QoQ
  2. Standalone EBITDA ₹588 Cr -6.5%QoQ
  3. Consolidated Revenue ₹3,909 Cr +1.5%QoQ
  4. Consolidated EBITDA ₹682 Cr
  5. Consolidated EBITDA Margin 17.4%
  6. EU Aluminum EBITDA ₹33 Cr
  7. US Aluminum EBITDA Margin 6.1%
  8. Tariff-related Expense ₹14 Cr

What they filed

Q1 FY27: revenue up 18.7%, net profit down 131.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,689 3,476 3,853 3,909 4,032 +9%4,343 +25%4,528 +18%4,640 +19%
EBITDA647 623 679 670 724 +12%746 +20%777 +14%698 +4%
Net profit243 213 283 284 299 +23%273 +28%233 −18%-90 −132%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • M&A American Axle India CV Assets Acquisition · Integrated

    Build upon India bet, add value-added products, access LCV/SUV segments, vital engineering know-how

    Expected to add ₹1,000 crores to consolidated topline for the year, consolidating from Q2 FY26.

    Our acquisition of the American Axle India CV Assets is another step to build upon our India bet and to add more value-added products in our lineup. This gives us access to the thriving light commercial vehicle and SUV segments as well. In addition to manufacturing facilities, these assets provide us with vital engineering know-how to design axles. American Axles should add Rs. 1,000 crores to the consolidated topline for the year. We will see it consolidate from Q2 FY26.

Guidance & targets

Overall Performance

  • Momentum Overall Performance · especially in the second half · Medium confidence positive momentum
    I think to sum it up from where we are today, we should see positive momentum in news flows and performance, especially in the second half.

    — Amit Kalyani

Aerospace Growth

  • Annual YoY Growth Aerospace Growth · annually YOY · High confidence 20% plus
    aerospace should continue its 20% plus growth annually YOY.

    — Amit Kalyani

American Axle Contribution

  • Consolidated Topline Addition American Axle Contribution · for the year · High confidence Rs. 1,000 crores
    American Axles should add Rs. 1,000 crores to the consolidated topline for the year. We will see it consolidate from Q2 FY26.

    — Amit Kalyani

KSSL Revenue

  • Annual Revenue Growth KSSL Revenue · on an annual basis · Medium confidence growth
    Okay. So, on an annual basis, there should be growth in the revenue? Yes, that is what we, that is what we are projecting.

    — Amit Kalyani

Server Market Size

  • Annual Market Volume Server Market Size · a year · High confidence 20,000 a year going up to 75,000 a year
    I believe that there is a large market for servers, something in the order of 20,000 a year going up to 75,000 a year.

    — Amit Kalyani

What to watch in Q2 FY26

Tariff impact resolution and Q2 financial impact

next quarter (Q2 FY26)
Current ₹14 crores absorbed in Q1; new tariffs effective Oct 7, 2025. Management waiting to understand full situation.
Target Clarity on tariff burden sharing and Q2 financial impact.

Why it matters

Tariffs are a significant uncertainty impacting profitability and order inflows, and management is still assessing the full impact.

The uncertainties around the whole tariffs have created a lot of disruption in the global outlook for automotive global in the U.S. and worldwide.

Risks & concerns

  • Tariff-related uncertainty and disruption in global automotive outlook

    high

    The uncertainties around the whole tariffs have created a lot of disruption in the global outlook for automotive global in the U.S. and worldwide. Tariff-related uncertainty is definitely something that nobody has ever experienced before, and it's something that we are engaged with our customers in finding a resolution to.

    Management acknowledged

  • Seasonally weak Q1 for JSA aggravated by tariff uncertainty and renewable energy slowdown

    medium

    Q1 in JSA is a seasonally weak quarter aggravated by tariff uncertainty and some amount of slowdown in the renewable energy sector due to the pullback on renewables in the United States.

    Management acknowledged

  • Weaker Q2 driven by US exports

    medium

    Q2 looks a little weaker driven by U.S. exports and hopefully marks a low for this cycle.

    Management acknowledged

  • Challenges in EV sector (e.g., magnet availability) impacting KPTL E-Mobility profitability

    medium

    Right now, there are challenges in EV for everyone because of the whole, no magnets available and things like that.

    Management acknowledged

Q&A highlights

7 direct
Tariff impact and competitiveness of Indian exports Direct
Right now, irrespective of who pays the tariff, whether we pay the tariff or the customer pays the tariff, at the end of the day, it is compensated in price. And usually what happens is customers work with us to find such solutions because obviously these are extraordinary circumstances. And given the fact that we provide critical products, all customers are working with us to find suitable solutions because that is the need of the hour right now. ... All the countries that produce these parts have the same tariffs. I mean, either we are the lowest or we are equal to what anybody else is. Nobody is lower than India.

Clarifies how tariffs are absorbed and Bharat Forge's competitive position relative to other geographies, stating no other country has lower tariffs.

Asked by Kapil Singh

Impact of tariffs on Q1 financials and future Direct
No. That was for full quarter. ... Even for this tariff that is applicable now, the effective date of implementation will be 7th of October or something like that. So, we will have some time for whatever is being shipped post 7th August.

Confirms the ₹14 crores tariff impact was for the full Q1 and provides clarity on the effective date of new tariffs, suggesting future impact.

Asked by Kapil Singh

Defense order pipeline and carbine opportunity Direct
Look, as you know, we have announced that we had a pipeline of Rs. 9,000 crores. After which we have one more tender which has to get converted into a signed order. Once that happens, that will add another Rs. 1,400 odd crores to our order book. ... Yes, we are L1, but the contract is not yet signed. ... It's huge. State government level... That's only 200,000.

Quantifies the defense pipeline and potential new order wins, specifically for carbines, and clarifies the status of the carbine contract.

Asked by Gunjan

US Aluminum business profitability drivers Direct
Well, one factor is that our operating metrics in terms of volume capacity utilization have improved. So that's really fueling this improvement. And, I am hoping that having a comparative source make in the U.S. will help other U.S. OEMs maintain their MCA requirements.

Explains the reasons behind the improved profitability in the US aluminum business, highlighting utilization and strategic positioning.

Asked by Amyn Pirani

Delay in price increases for aluminum business Direct
No, it's not yet done.

Indicates that the company is still working on securing price increases from customers for the aluminum business, suggesting potential for further margin improvement.

Asked by Amyn Pirani

KSSL revenue performance and outlook Direct
KSSL's revenue, don't look at it on a quarterly basis, look at it on an annual basis. Because there are a lot of, let's say lumpiness in this business. So, I would look at it on an annualized basis. And we will see a recovery in Q3 and Q4.

Provides context for KSSL's revenue fluctuations, advising an annual view and projecting a recovery in the second half of the fiscal year.

Asked by Kapil Singh

New ventures in servers and SMT lines Direct
On SMT, we have electronics as a part of our business in defense and in EV and other electronics businesses. So, we see an opportunity to make electronics components, systems and also some end products... we have set that up and we are already generating revenue from this and we have applied for the PLI for this... There are three sectors of servers that we are targeting in India... something in the order of 20,000 a year going up to 75,000 a year.

Details the company's strategic entry into electronics manufacturing (SMT) and server production, outlining the market opportunity and alignment with government incentives.

Asked by Balasubramanian

KPTL E-Mobility subsidiary breakeven timeline Partial
But for the profit, I think it depends on getting a couple of big contracts going, which we are working on. Let us see. Right now, there are challenges in EV for everyone because of the whole, no magnets available and things like that. So, let us see.

Highlights the challenges in the EV sector (e.g., magnet availability) and indicates that profitability for KPTL E-Mobility is contingent on securing large contracts, without giving a clear breakeven timeline.

Asked by Balasubramanian

2 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Bharat Forge reported a mixed Q1 FY26. Standalone revenue was ₹2,105 crores, a 2.7% decline, with EBITDA at ₹588 crores, down 6.5%, attributed to global automotive disruptions, emission norm pauses, and aerospace seasonality. The company absorbed ₹14 crores in tariff-related expenses. In contrast, consolidated revenue increased by 1.5% QoQ to ₹3,909 crores, with consolidated EBITDA reaching ₹682 crores, representing a 17.4% margin, driven by improved overseas profitability and reduced losses in Kalyani Powertrain.

New Business Wins and Strategic Acquisitions

During Q1, Bharat Forge secured new business worth ₹850 crores, comprising ₹429 crores for Bharat Forge, ₹269 crores for Defense, and ₹149 crores for JSA. The acquisition of American Axle India CV Assets is expected to contribute ₹1,000 crores to the consolidated topline for FY26, with consolidation commencing from Q2 FY26, enhancing the company's presence in light commercial vehicle and SUV segments.

Overseas Operations and Restructuring Efforts

The EU aluminum operations remained stable with 70% utilization and generated an EBITDA of ₹33 crores. The US aluminum business achieved its second consecutive quarter of positive EBITDA, with a 6.1% margin, driven by operational efficiencies and improved utilization. The company is actively evaluating restructuring options for its European steel business, with a roadmap expected within the next six months.

Defense and Aerospace Business Outlook

The defense business has a robust RFQ pipeline, and management anticipates finalizing additional orders this fiscal year, including a potential ₹1,400 crores order for carbines where the company is L1. The aerospace business is projected to maintain strong annual YoY growth exceeding 20%, with limited exposure to the US market.

Emerging Opportunities in India and New Technologies

Bharat Forge sees a shift in its center of gravity towards Indian operations, with opportunities in machine tools and emerging sectors. The company is expanding into electronics manufacturing (SMT) for defense, EV, and other applications, having applied for PLI. In the server market, Bharat Forge is targeting three sectors (India-made, AI-based, data servers) within a market projected to grow from 20,000 units to 75,000 units annually.

Tariff Uncertainty and Q2 Outlook

Tariff-related uncertainty remains a significant concern, disrupting the global automotive outlook and impacting order inflows. Management noted that Q2 is expected to be weaker, particularly due to US exports, and may represent a low point for the current cycle. The company is actively working with customers to find resolutions for tariff compensation, with new tariffs effective October 7, 2025.

KSSL and KPTL E-Mobility Performance

KSSL's revenue is characterized by lumpiness, and management advises an annual view, projecting a recovery in Q3 and Q4 FY26. The KPTL E-Mobility subsidiary has reduced costs and losses, but profitability depends on securing large contracts. The EV sector faces broader challenges, including magnet availability, which impacts the breakeven timeline for KPTL E-Mobility.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Automobile and Auto Components earnings calls