Detailed Narrative
Q4 & FY25 Standalone Performance Overview
Bharat Forge delivered a stable standalone performance in Q4 FY25, with revenues growing 3% QoQ to ₹2,163 crores. Standalone EBITDA increased by 6.7% QoQ to ₹629 crores, translating into a margin of 29.1%, which is 100 bps higher than the previous quarter. For the full fiscal year 2025, standalone revenue stood at ₹8,844 crores and EBITDA at ₹2,524 crores, achieving a margin of 28.5%, representing a 100-basis points expansion YoY. The company's balance sheet remains robust with net long-term loans at ₹1,336 crores and FY25 ROCE (net of cash) at 18.1%.
Consolidated Performance and Overseas Operations Improvement
On a consolidated basis, Q4 FY25 revenue was ₹3,853 crores, a 7.5% decrease YoY. However, EBITDA margin expanded by 170 basis points, primarily due to reduced losses from overseas operations and E-mobility. For FY25, consolidated revenue was ₹15,123 crores, 3.6% lower YoY, but the operational EBITDA margin improved by 180 basis points YoY to reach 18.2%. European operations recorded an EBITDA of ₹96 crores in FY25, while US operations narrowed their EBITDA loss to ₹47 crores, turning positive in Q4 with ₹4 crores EBITDA.
New Business Wins and Diversification Strategy
In FY25, Bharat Forge secured new business worth ₹6,959 crores across key segments. This includes ₹5,000 crores in Defense, ₹1,685 crores in standalone normal operations, and ₹245 crores in JSA. The company highlighted its increasing diversification and resilience, with industrial exports remaining flat at around ₹1,600 crores despite a decline in oil and gas, compensated by growth in high horsepower and aerospace. Aerospace now constitutes 15% of industrial exports, having grown 4x in the past five years, and is expected to continue its high growth trajectory.
Defense and E-mobility Outlook
The Defense segment is projected to grow by 15-20% in FY26, supported by a strong order book of approximately ₹9,500 crores. This includes the ₹3,417 crore ATAGS order for 307 guns, with revenue recognition expected to commence from Q4 FY26 and spread over two years. In E-mobility, products are reaching maturity, and the company anticipates revenue progression this year, with a goal to achieve profitability (black numbers) by the end of the second half of the year.
Capital Allocation and Strategic M&A
CAPEX for Indian operations in FY25 was ₹750 crores, and overseas Greenfield projects for aluminum forging in the US have been completed. For FY26, the total CAPEX for standalone and consolidated operations is estimated to be around ₹500 crores. The company has received CCI approval for the American Axles India Assets Transaction, which is expected to conclude by the end of June, aiming to enhance market penetration and content per vehicle.
US Tariff Situation and Mitigation Efforts
Management addressed the significant uncertainty surrounding the US tariff situation, noting that tariffs apply to shipments after April 5th, primarily impacting the passenger car segment. While acknowledging the lack of full clarity, the company is engaged with customers who are reportedly willing to absorb the tariffs. Bharat Forge believes its strong customer relationships, cost structure, and diversified product portfolio across many sectors and geographies will help mitigate the impact, preventing direct exposure to the tariffs.