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    Bharat Forge

    BHARATFORG
    Automobile and Auto Components·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

    5

    • 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

    6

    • 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.

    What Changed2

    vs Q2 FY26

    Guidance items8 → 5 (-3)Risks discussed5 → 4 (-1)

    Key financials

    Single quarter

    08 metrics
    1. 01Standalone Revenue₹2,105 Cr-2.7%QoQ
    2. 02Standalone EBITDA₹588 Cr-6.5%QoQ
    3. 03Consolidated Revenue₹3,909 Cr+1.5%QoQ
    4. 04Consolidated EBITDA₹682 Cr
    5. 05Consolidated EBITDA Margin17.4%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    M&A

    American Axle India CV Assets

    acquisition · integrated

    Guidance & targets

    5
    CategoryTargetPriority
    Overall Performance
    Momentum
    positive momentum
    		Medium
    Aerospace Growth
    Annual YoY Growth
    20% plus
    		High
    American Axle Contribution
    Consolidated Topline Addition
    Rs. 1,000 crores
    		High
    KSSL Revenue
    Annual Revenue Growth
    growth
    		Medium
    Server Market Size
    Annual Market Volume
    20,000 a year going up to 75,000 a year
    		High

    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.
    TargetClarity 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.

    How to verify

    key_financials.metrics[label='Tariff-related Expense']

    Risks & concerns

    4
    RiskSeverity

    Tariff-related uncertainty and disruption in global automotive outlook

    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

    high

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

    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

    medium

    Weaker Q2 driven by US exports

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

    medium

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

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

    medium

    Q&A highlights

    8

    “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

    2 min read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.