Bharat Forge Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Bharat Forge reported a mixed Q2 FY26, with consolidated revenues of ₹4,032 crores and an EBITDA margin of 17.7%. While standalone performance was impacted by a significant slowdown in North American CV exports and inventory destocking, the company saw strong growth in aerospace and JS Autocast. New business wins, particularly in defense, and a robust cash position of ₹2,300 crores underpin future growth, despite ongoing uncertainties in the North American market and challenges in overseas steel and Indian EV segments.

Highlights

  • Consolidated revenue for Q2 FY26 was ₹4,032 crores, with a healthy EBITDA margin of 17.7%, indicating steady performance in overseas subsidiaries and strong execution in defense.

  • The company secured new business worth ₹1,582 crores in H1 FY26, including ₹823 crores in component and industrial, ₹559 crores in defense, and ₹200 crores in casting.

  • Aerospace business is projected to record strong growth, expecting to exceed ₹350 crores in FY26, up from approximately ₹250 crores last year, with this growth rate anticipated to continue for the next 3-4 years.

  • JS Autocast (BFISL) demonstrated robust performance with Q2 sales growth of 26% and EBITDA growth of 44%, with management bullish on continued margin and topline improvement.

  • Bharat Forge's Kalyani Strategic Systems secured a new order of over ₹250 crores from the Navy for unmanned marine systems, to be delivered within one year.

Concerns

  • Standalone revenues degrew 7.5% QoQ to ₹1,947 crores, primarily due to rapid degrowth in the North American CV market and inventory destocking.

  • CV exports to North America were down 48% QoQ and 67% YoY, contributing significantly to the standalone revenue decline.

  • Standalone EBITDA margins were 28%, lower by about 7.3% sequentially, partly impacted by ₹24 crores in tariff charges.

  • The near-term outlook for the North American market remains uncertain due to demand uncertainty, trade policies, and ongoing destocking.

  • Overseas steel business and the EV business in India were identified as 'weak spots' in the overall business portfolio.

Key financials

  1. Standalone Revenue ₹1,947 Cr -7.5%QoQ
  2. Standalone EBITDA ₹545 Cr
  3. Standalone EBITDA Margin 28% -7.3%QoQ
  4. Consolidated Revenue ₹4,032 Cr
  5. Consolidated EBITDA Margin 17.7%
  6. Consolidated Cash ₹2,300 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.

Segment breakdown

  • CV Exports to North America
    0.48 decimal_fraction QoQ Decline0.67 decimal_fraction YoY Decline
  • European Aluminum Operations
    60% Utilization Levels₹32 Cr EBITDA
  • US Aluminum Operations
    65% Utilization Levels₹16 Cr EBITDA
  • JS Auto (BFISL)
    0.26 decimal_fraction Q2 Sales Growth0.44 decimal_fraction Q2 EBITDA Growth

Order book

high confidence

Total value

₹11,000 Cr

as of 2025-09-30 range

Inflow this quarter

₹250 Cr

Execution

Defense order book of ~₹11,000 crores, with ATAGs execution starting in 6-9 months and carbine order (₹1,400 crores) execution over 4 years after signing (9-12 months from now). New Navy order (₹250+ crores) to be delivered within one year.

Composition

Mix 3 overall new business H1s
  • Bharat Forge Component and Industrial ₹823 Cr 52%
  • Defense ₹559 Cr 35.3%
  • Casting ₹200 Cr 12.6%

Share of order book by overall new business H1, derived from disclosed amounts

The company has a substantial defense order book, with execution timelines varying by project. New business wins in H1 FY26 demonstrate diversification across industrial, defense, and casting segments.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed
    • New borrowing Enabling approval for up to INR 2000 crores in debt plus NCD for organic and inorganic growth in India. ₹2,000 Cr
    So, we are raising some funds right now. This is all debt. It will be a combination of debt plus NCD and this is both for organic growth plus for inorganic growth in India. So, we have taken an enabling approval of up to INR 2000 crores and we will action this depending on when the timing is right.
  • M&A K Drive Mobility Acquisition · Integrated

    Consolidation of American Axial India Manufacturing business, offering significant long-term opportunities.

    Consolidation included in Q2 numbers for the first time.

    Quarter 2 numbers also include first time consolidation of K Drive Mobility which was the American Axial India Manufacturing business which we acquired. The integration progress is on track.
  • Liquidity Cash ₹2,300 Cr Strong balance sheet with consolidated cash of approximately INR 2,300 crores.
    Our balance sheet remains strong with a consolidated cash of about INR 2,300 crores.

Guidance & targets

Revenue

  • Aerospace Revenue Revenue · FY26 · High confidence excess of INR 350 crores

    From INR 250 crores today

    So, aerospace for last year, for the full year was in the ballpark of about INR 250 odd crores. Okay, I think this year should be in excess of INR 350 crores. So, we are growing at that kind of rate or higher.

    — Amit Kalyani

  • Defense Revenues Revenue · next year · High confidence better than this year
    So, it would be better than this year for sure.

    — Amit Kalyani

Revenue Growth

  • Aerospace Revenue Growth Rate Revenue Growth · next 3-4 years · High confidence continue for the next 3-4 years
    That rate hopefully should continue for the next 3-4 years at least.

    — Amit Kalyani

Outlook

  • Overall Business Outlook Outlook · Q3 and Q4 FY26 · Medium confidence Q2 and Q3 similar, Q4 uptick
    I would say Q2 and Q3 should be similar. And hopefully by Q4, we should see an uptick.

    — Amit Kalyani

Profitability

  • JS Auto Topline and EBITDA Performance Profitability · second half FY26 · High confidence better performance
    We are seeing continued growth. We should see better topline and EBITDA performance in second half.

    — Amit Kalyani

  • JS Autocast Margins Profitability · ongoing · High confidence continue to improve
    JS Autocast, we are already seeing improvement in margins. And we are quite bullish that we will continue to improve our margins, improve our topline and product mix as well.

    — Amit Kalyani

Volume

  • India MHCV Production Outlook Volume · near term · Medium confidence remain flat
    MHCV, the broader expectation is it should remain flat. Not a very significant growth or degrowth.

    — Subodh Tandale

Strategy

  • Steel Europe Restructuring Roadmap Strategy · by end of this fiscal · High confidence in place
    We will have a roadmap in place outlining the shape and form of the proposed restructuring of the steel business by the end of this fiscal.

    — Amit Kalyani

What to watch in Q3 FY26

North American Market Recovery

next quarter (Q3 FY26)
Current Weak CV exports, inventory destocking, demand uncertainty
Target Signs of recovery, Q4 uptick

Why it matters

Recovery in this key market is crucial for improving standalone export performance and overall business outlook.

I would say Q2 and Q3 should be similar. And hopefully by Q4, we should see an uptick.

Risks & concerns

  • Demand uncertainty in North American market

    high

    Due to trade policies and constant changes, the near-term outlook for the North American market remains a question mark.

    Management acknowledged

  • Weak CV exports and inventory destocking

    high

    CV exports to North America are down significantly, and inventory destocking has impacted export performance.

    Management acknowledged

  • Geopolitical situation and tariffs

    medium

    The geopolitical situation between India and US, particularly regarding tariffs, remains unresolved, impacting US exports.

    Management acknowledged

  • Performance of overseas steel business

    medium

    Overseas steel business is identified as a 'weak spot' in the overall portfolio, with restructuring options being evaluated.

    Management acknowledged

  • Performance of EV business in India

    medium

    The EV business in India is also identified as a 'weak spot' that the company is working to sort out.

    Management acknowledged

Q&A highlights

6 direct
Outlook for Q3 and Q4 FY26 Direct
I would say Q2 and Q3 should be similar. And hopefully by Q4, we should see an uptick.

Provides near-term outlook for business recovery, indicating Q3 will remain challenging but Q4 might see improvement.

Asked by Binay from Morgan Stanley

Drivers of non-auto export growth Direct
It's multiple sectors. It includes power gen, it includes construction, mining and aerospace.

Clarifies the diversified nature of export growth beyond aerospace, highlighting resilience across various industrial segments.

Asked by Binay from Morgan Stanley

Sustainability of high gross margins Direct
We have done a lot of cost reduction work. When the quarter started and it looked really bleak, we took a lot of block shutdowns, etc. And we are trying to do more value addition in-house, improve our product mix. So, it's a combination of all these factors.

Explains the factors contributing to impressive gross margins, suggesting a mix of operational efficiency and strategic product decisions.

Asked by Binay from Morgan Stanley

Execution timeline for the carbine order Partial
First, we have to sign the order, then FOPM. So, from the time the order gets signed, I would say about 9 months to 12 months. ... It's executed over a 4-year period because it's 2 lakh order weapons.

Provides clarity on the phased execution and long-term revenue visibility from a significant defense order, indicating a delay before revenue recognition.

Asked by Kapil Singh from Nomura

Impact and accounting of tariff charges Direct
This is the tariff charges, the sharing of tariff, the US tariff, what we have for our US exports. ... This is in sales.

Clarifies the nature and accounting treatment of the ₹24 crores tariff charges, which impacted standalone margins.

Asked by Kapil Singh from Nomura

Revenue opportunity and margins in server manufacturing business Partial
It's a very small, it's a business that we are trying to evaluate, because we see that as a very large new opportunity. ... So, I don't think looking at server manufacturing as a very big opportunity right now, because we are only learning this business. ... I think in six months from now to nine months from now, we will have a better idea of this business.

Highlights the exploratory nature of the server manufacturing business, indicating it's a long-term play with no immediate significant financial impact, and more clarity expected in 6-9 months.

Asked by Nitin Jain from Fairvalue Equity Advisory

Transfer of defense assets to Kalyani Strategic Systems (KSSL) and revenue booking Direct
Yes, so the revenue bookings remains the same. It's only the business what we have transferred from Bharat Forge to Kalyani Strategic Systems. And so the more of the assets which have moved and all the new orders, what we will get, those would be on Kalyani Strategic Systems.

Clarifies that while assets are transferred, revenue booking for existing orders remains with Bharat Forge, but new orders will be under KSSL, impacting future segment reporting.

Asked by Rishi Vora from Kotak Securities

Conversion timeframe for the defense order book Direct
As I mentioned, there is a process called FOPM that has to take place, after which within 6 to 9 months, we will start deliveries. First year, we will deliver maybe about 15 or so guns, after which we should increase our rate of delivery. And in all, we have to deliver 187 guns. So, I think we should deliver 187 in something like four years.

Provides a detailed timeline for the conversion of the ATAGs order into revenue, emphasizing the multi-year execution period and initial ramp-up phase.

Asked by Disha Shah

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Bharat Forge reported standalone revenues of ₹1,947 crores in Q2 FY26, marking a 7.5% sequential degrowth. This was primarily driven by a 48% QoQ and 67% YoY decline in CV exports to North America due to market degrowth and inventory destocking. Standalone EBITDA stood at ₹545 crores, with margins at 28%, a 7.3% sequential drop, including a ₹24 crore impact from tariff charges. Consolidated revenues for the quarter were ₹4,032 crores with an EBITDA margin of 17.7%, benefiting from steady performance in overseas subsidiaries and defense execution.

H1 FY26 Consolidated Performance and New Business Wins

For the first half of FY26, consolidated revenues reached ₹7,941 crores with an EBITDA margin of 17.6%. The company maintained a strong balance sheet with ₹2,300 crores in consolidated cash. Bharat Forge secured new business worth ₹1,582 crores in H1 FY26, comprising ₹823 crores from component and industrial, ₹559 crores from defense, and ₹200 crores from casting segments, demonstrating diversification efforts.

Overseas Operations and Restructuring Efforts

European aluminum operations remained stable with 60-65% utilization and generated ₹32 crores EBITDA. US aluminum operations recorded ₹16 crores EBITDA with 65% utilization. The company is actively evaluating restructuring options for its European steel operations, with a roadmap expected by the end of the fiscal year, addressing identified 'weak spots' in the portfolio.

Defense and Aerospace Segment Growth

The defense segment saw significant activity, including a new order of over ₹250 crores from the Navy for unmanned marine systems, to be delivered within one year. The carbine order, valued at ₹1,400 crores, is expected to commence execution 9-12 months after signing and will be delivered over four years. Aerospace is a strong growth driver, projected to exceed ₹350 crores in FY26 (up from ₹250 crores last year), with this growth rate anticipated to continue for the next 3-4 years, supported by new programs and global aero engine majors.

Indian Manufacturing and New Initiatives

Indian manufacturing, encompassing forging, defense, casting, and axle aggregates, now accounts for approximately two-thirds of consolidated revenues. The JS Autocast (BFISL) segment showed robust Q2 performance with 26% sales growth and 44% EBITDA growth, with management expecting continued improvement. The company also consolidated K Drive Mobility (American Axial India Manufacturing business) for the first time in Q2, which is expected to offer long-term opportunities. Bharat Forge is exploring server manufacturing as a new opportunity, with more clarity expected in 6-9 months.

Capital Allocation Strategy

The company has received an enabling approval to raise up to ₹2,000 crores through a combination of debt and NCDs. These funds are earmarked for both organic and inorganic growth opportunities within India. This strategy aligns with the company's focus on India as the fastest-growing global market and its intent to increase its market share through fundamental growth initiatives and potential acquisitions.

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