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    Bharat Forge

    BHARATFORG
    Automobile and Auto Components·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

    5

    • 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

    5

    • 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.

    What Changed2

    vs Q3 FY26

    Guidance items7 → 8 (+1)Risks discussed3 → 5 (+2)

    Key financials

    Single quarter

    06 metrics
    1. 01Standalone Revenue₹1,947 Cr-7.5%QoQ
    2. 02Standalone EBITDA₹545 Cr
    3. 03Standalone EBITDA Margin28%-7.3%QoQ
    4. 04Consolidated Revenue₹4,032 Cr
    5. 05Consolidated EBITDA Margin17.7%

    Segment breakdown

    CV Exports to North America
    48% QoQ Decline67% YoY Decline
    European Aluminum Operations
    60% Utilization Levels₹32 Cr EBITDA
    US Aluminum Operations
    65% Utilization Levels₹16 Cr EBITDA
    JS Auto (BFISL)
    26% Q2 Sales Growth44% Q2 EBITDA Growth
    List

    Order Book

    high confidence

    Total Value

    ₹ 11,000 crores

    as of 2025-09-30

    range

    Inflow this qtr

    ₹ 250 crores

    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

    Mix3 overall new business H1s
    • Bharat Forge Component and Industrial₹ 823 crores52.0%
    • Defense₹ 559 crores35.3%
    • Casting₹ 200 crores12.6%

    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

    3
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    M&A

    K Drive Mobility

    acquisition · integrated

    Liquidity

    Cash ₹2,300 crores

    Strong balance sheet with consolidated cash of approximately INR 2,300 crores.

    Guidance & targets

    8
    CategoryTargetPriority
    Revenue
    Aerospace Revenue
    excess of INR 350 crores
    		High
    Revenue
    Defense Revenues
    better than this year
    		High
    Revenue Growth
    Aerospace Revenue Growth Rate
    continue for the next 3-4 years
    		High
    Outlook
    Overall Business Outlook
    Q2 and Q3 similar, Q4 uptick
    		Medium
    Profitability
    JS Auto Topline and EBITDA Performance
    better performance
    		High
    Profitability
    JS Autocast Margins
    continue to improve
    		High
    Volume
    India MHCV Production Outlook
    remain flat
    		Medium
    Strategy
    Steel Europe Restructuring Roadmap
    in place
    		High

    North American Market Recovery

    next quarter (Q3 FY26)
    CurrentWeak CV exports, inventory destocking, demand uncertainty
    TargetSigns 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.

    How to verify

    key_financials.segment_breakdown[name='CV Exports to North America']

    Risks & concerns

    5
    RiskSeverity

    Demand uncertainty in North American market

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

    high

    Weak CV exports and inventory destocking

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

    high

    Geopolitical situation and tariffs

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

    medium

    Performance of overseas steel business

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

    medium

    Performance of EV business in India

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

    medium

    Q&A highlights

    8

    “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

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    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.