Bharat Forge Limited

Bharat Forge reported strong Q3 FY26 standalone revenues of INR 2,084 crores, marking a 7% sequential increase. Standalone EBITDA stood at INR 569 crores, growing 4.6% quarter-on-quarter, with an EBITDA margin of 27.3%. Consolidated revenues for the quarter were INR 4,343 crores, achieving an EBITDA margin of 17.3%. For the nine months ended December 31, 2025, standalone revenues were INR 6,135 crores with a 27.7% EBITDA margin, and consolidated revenues were INR 12,284 crores with a 17.5% EBITDA margin.

Indian subsidiaries demonstrated robust performance, contributing significantly to the overall results. JSA, the casting business, recorded a strong 22% growth in top line and a 39% increase in EBITDA. K Drive, a recent acquisition, saw its EBITDA margin improve from 3% to 5% in the quarter, despite a muted top line, indicating operational efficiencies.

Overseas operations faced mixed conditions. European operations maintained stability with an EBITDA of INR 39 crores and utilization levels between 60-65%, despite 'patchy demand' and holiday season impacts. US Aluminum operations generated an EBITDA of INR 10 crores at 65% utilization, but profitability was affected by tariffs on aluminum. Management acknowledged that Europe faces a 'secular problem' and is evaluating restructuring options for its European steel business, with an update expected by the fiscal year-end.

The company secured new business worth INR 2,388 crores during the quarter. This includes INR 378 crores for the component business, a substantial INR 1,878 crores for defense, INR 78 crores for casting, and INR 55 crores for K Drive. These wins highlight broad-based demand and strong order inflows across Bharat Forge's key business segments.

Bharat Forge is strategically focused on and anticipates strong growth in its defense and aerospace sectors. The defense business is projected to achieve a 30-40% plus growth next year, driven by the commencement of ATAGS orders and CQB carbine production. Management believes defense could eventually contribute 18-30% of overall revenues, up from the current 10-11%. The aerospace segment is also expected to see 'very strong growth' in the coming years due to new programs and capacity additions.

The Kalyani Group is planning a large-scale project in Odisha with a total investment of INR 17,000 crores. Bharat Forge's share of this investment is projected to be up to INR 3,000 crores, earmarked for forging, machining, and potentially casting facilities. This project is considered the 'next growth phase' after existing expansions and is expected to commence beyond the next fiscal year.

The acquisition of American Axle has performed well, contributing to a nearly 200 basis points improvement in margins. Management views this as a successful acquisition in a high-growth sector, noting significant new business wins from Indian OEMs. While market share gains were confirmed, specific quantification was deferred to the next quarter.