Bharat Forge Limited — Q4 FY25 earnings call

Call held 8 May 2025

Management summary

Bharat Forge reported a stable Q4 FY25 standalone performance with revenue and EBITDA growth, and significant margin expansion both QoQ and YoY. Consolidated results showed margin improvement despite a YoY revenue decline, driven by reduced losses in overseas operations. The company secured substantial new business, particularly in Defense, and saw its US operations turn profitable. However, the economic situation in Europe and the uncertainty surrounding US tariffs remain areas of concern.

Highlights

  • Standalone Q4 revenue of ₹2,163 crores, up 3% QoQ.

  • Standalone Q4 EBITDA of ₹629 crores, up 6.7% QoQ, with margin at 29.1% (100 bps higher QoQ).

  • FY25 Standalone EBITDA margin expanded by 100 bps YoY to 28.5%.

  • Consolidated Q4 EBITDA margin expanded by 170 bps YoY.

  • FY25 Consolidated EBITDA margin improved by 180 bps YoY to 18.2%.

  • Secured new business worth ₹6,959 crores in FY25 (Defense ₹5,000 crores, Standalone normal ops ₹1,685 crores, JSA ₹245 crores).

  • JSA achieved 15%+ EBITDA margin, doubling profits in FY25.

  • US operations moved into positive EBITDA (₹4 crores) in Q4 FY25.

  • Aerospace grew 4x in past five years, now 15% of industrial exports.

Concerns

  • Consolidated Q4 revenue of ₹3,853 crores was 7.5% lower YoY.

  • FY25 Consolidated revenue of ₹15,123 crores was 3.6% lower YoY.

  • European aluminum utilization was 60-65% due to the economic situation in Europe.

  • Standalone Q4 included an exchange loss of ₹12 crores.

  • Uncertainty surrounding the US tariff situation.

Key financials

2 periods

Headline

  • Standalone Revenue
    ₹2,163 Cr
    QoQ +3%
  • Standalone EBITDA
    ₹629 Cr
    QoQ +6.7%
  • Standalone EBITDA Margin
    29.1%
  • Standalone PBT (pre-exceptional)
    ₹494 Cr
    QoQ +4%
  • Consolidated Revenue
    ₹3,853 Cr
    YoY -7.5%
  • Consolidated EBITDA Margin
    —

FY25

  • Standalone Revenue
    ₹8,844 Cr
  • Standalone EBITDA
    ₹2,524 Cr
  • Standalone EBITDA Margin
    28.5%
  • Consolidated Revenue
    ₹15,123 Cr
    YoY -3.6%
  • Consolidated EBITDA Margin
    18.2%

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

  • Kalyani Strategic Systems (Defense)
    ₹1,700 Cr FY25 Revenue (Consolidated)
  • JSA (JS Auto)
    ₹200 Cr Q4 Revenue15% Margins
  • US Operations
    ₹4 Cr Q4 EBITDA₹47 Cr FY25 EBITDA Loss70% Aluminum Utilization
  • European Operations
    ₹96 Cr FY25 EBITDA60% Aluminum Utilization

Order book

high confidence

Total value

₹9,500 Cr

as of 2025-03-31 quantified

Composition

Mix 3 segments
  • Defense (new business secured FY25) ₹5,000 Cr 72.2%
  • Standalone Normal Operations (new business secured FY25) ₹1,685 Cr 24.3%
  • JSA (new business secured FY25) ₹245 Cr 3.5%

Share of order book by segment, derived from disclosed amounts

The company has a strong order book and has secured significant new business across key segments, with many new programs in the pipeline.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹500 Cr
    • Indian operations (FY25) ₹750 Cr
    • Overseas Greenfield projects in US for aluminum forging
    The CAPEX for Indian operations was Rs.750 crores in FY25. We have completed the CAPEX for our overseas Greenfield projects in US for aluminum forging and we don't foresee much of investments in overseas entities for next year. ... I think roughly both put together would be in the region of Rs.500 crores next year.
  • Debt Net ₹1,336 Cr
    Our balance sheet continues to be robust with surplus funds, the net of long-term loans are at about Rs.1,336 crores. For FY25 ROCE the net of cash was 18.1%. At a consolidated level, Q4 revenue was at Rs.3,853 crores, which was 7.5% lower on YoY basis. However, EBITDA moved higher translating into margin expansion of 170 basis points. This is largely on account of reducing the losses for our overseas operations as well as E-mobility, and we continue to do that.
  • M&A American Axles India Assets Acquisition · Pending regulatory

    to grow our market penetration and our presence and content per vehicle going forward.

    We have now received the CCI approval for our American Axles India Assets Transaction. We expect to conclude this transaction by the end of June. I think this is going to be another good opportunity for us to grow our market penetration and our presence and content per vehicle going forward.
  • Liquidity Liquidity disclosed Balance sheet continues to be robust with surplus funds.
    Our balance sheet continues to be robust with surplus funds, the net of long-term loans are at about Rs.1,336 crores.

Guidance & targets

Volume

  • Defense Growth Volume · FY26 · High confidence 15-20%
    We expect to see a 15% to 20% growth in FY26.

    — Amit Kalyani

Revenue

  • E-mobility Revenue Progression Revenue · this year · Medium confidence Start seeing revenue progression
    In terms of E-mobility, we are now very hopeful that our products are at maturity, and we should start seeing revenue progression going forward this year, including moving towards black numbers towards the end of the second half of the year.

    — Amit Kalyani

  • ATAGS Order Revenue Revenue · Q4 FY26 · High confidence Start from Q4
    I would say Q4 onwards. ... For this order, two years. ... Two years beginning 4Q FY26? Yes.

    — Amit Kalyani

  • Industrial Exports Growth (new business) Revenue · next three to four years · Medium confidence adding to the growth
    You will witness one new business adding to the growth of industrial exports in the next three to four years.

    — Amit Kalyani

Profitability

  • E-mobility Profitability Profitability · end of the second half of the year · Medium confidence Moving towards black numbers
    In terms of E-mobility, we are now very hopeful that our products are at maturity, and we should start seeing revenue progression going forward this year, including moving towards black numbers towards the end of the second half of the year.

    — Amit Kalyani

Capex

  • Total Capex Capex · next year (FY26) · High confidence ₹500 crores
    I think roughly both put together would be in the region of Rs.500 crores next year.

    — Amit Kalyani

Market Share

  • JSA Growth Market Share · shortly · Medium confidence four-digit number
    We have added a lot of new customers, and we are on a solid growth trajectory to a four-digit number shortly.

    — Amit Kalyani

What to watch in Q1 FY26

Clarity on US Tariff Situation

next quarter
Current High uncertainty, waiting for clarity
Target More definitive information on tariff scope and impact

Why it matters

The tariff situation could significantly impact export volumes and pricing for US-bound products.

The one thing that I want to mention is, due to the US tariff situation, there is a lot of uncertainty. Nobody has an answer right now. I think we all have to wait and watch.

Risks & concerns

  • US Tariff Situation Uncertainty

    high

    The US tariff situation creates a lot of uncertainty, with no clear answers yet on its full impact or resolution, though management believes customers may absorb tariffs.

    Management acknowledged

  • European Economic Situation

    medium

    The economic situation in Europe has led to lower utilization rates (60-65%) in the EU aluminum operations.

    Management acknowledged

  • Class-8 Truck Market Pessimism

    medium

    There is pessimism in the Class-8 truck market due to tariff uncertainties and EP emissions, making future demand difficult to predict.

    Analyst acknowledged

Q&A highlights

7 direct
US Tariffs and Customer Conversations Direct
Currently, as you know, the tariff applies to shipments that have left India after 5th of April. So we have time until the third week of May, number one. Number two is at this point there is a clarity that so-called the automotive tariffs that they're talking about will be applicable for the passenger car segment or like products. And the third part of it is that we are engaged with all our customers and all our customers are talking positively in terms of taking over the tariffs from our side, I mean, we won't be exposed to tariffs is what we think, but that's active discussions ongoing with all the customers and considering the situation in the US.

Clarifies the immediate applicability of tariffs, the specific segment affected (passenger cars), and management's confidence that customers will absorb the tariffs, mitigating direct impact on Bharat Forge.

Asked by Gunjan Prithyani, Bank of America

US Tariffs Applicability to CV/Forging Direct
Gunjan, what we know so far is that it's applicable for passenger cars. We don't know anything more than that because no details have come out. So I think we should wait and watch. And besides that, please remember that our exports are across many sectors, many geographies and many products. So, we just have to wait and watch. We don't have any clarity on this yet.

Further narrows the scope of the tariffs to passenger cars, suggesting less direct impact on their commercial vehicle and forging businesses, but acknowledges ongoing uncertainty.

Asked by Gunjan Prithyani, Bank of America

Class-8 Cycle and EP Emissions Impact Partial
Again, Gunjan, it's very difficult to answer this question with the frame of the tariffs uncertainty in place. Typically if you had an emission norm changing, you have a pre-buy because there is a cost increase. If there is no cost increase coming, you should have two normal years rather than one pre-buy and one low year. We don't know. Typically that's what you should expect. There are two normal years. Subodh, am I right? Yes. But I think that everybody is right now waiting on the sideline with the whole tariff issue being such a question mark. So I think that's where we stand.

Highlights the significant uncertainty in the Class-8 truck market due to the confluence of tariff issues and potential emission norm changes, making forecasting difficult.

Asked by Gunjan Prithyani, Bank of America

Electronics and Servers Business Strategy Direct
I think that electronics are going to be a very large part of the overall industrial landscape. If we look at automotives also, the share of electronics in the automobile as a percentage of total vehicle value is dramatically increasing. So if we want to be in electronics, you can't only be in one or two areas. You need to build scale, you need to build supply chain capability, and I think we are going to do that in multiple areas and the Indian Government wants to create Indian electronics players in niche areas where imports are not wanted to be used. So, I think there is an opportunity and that's what we are pursuing.

Reveals a strategic diversification into electronics, aligning with broader industrial trends and government initiatives, indicating a new growth vector for the company.

Asked by Gunjan Prithyani, Bank of America

US Operations Profitability and Raw Material Tariffs Direct
Yes, we are producing steel and aluminum components in the US. We buy our steel locally and we produce our alloyed aluminum in-house by buying aluminum ingots. So I think that in general we don't have an impact and whatever impact we have will be passed on.

Explains how the company's localized production and sourcing strategy in the US helps mitigate the impact of steel and aluminum tariffs, contributing to the profitability of US operations.

Asked by Kapil Singh, Nomura

Defense Revenue and ATAGS Order Timeline Direct
Okay. Yes. So the defense sales was little above Rs.1,550 crores on a consolidated basis. ... We won a lot of new orders including the ATAGS order. So that should also start delivering towards the later part of this year, plus we have many new programs and orders that we have in the fire and it should fortify by then. ... I would say Q4 onwards. ... For this order, two years. ... Two years beginning 4Q FY26? Yes.

Provides specific FY25 defense revenue and a clear timeline for the significant ATAGS order, indicating a strong future revenue stream for the defense segment starting Q4 FY26.

Asked by Kapil Singh, Nomura

US Tariff Offset for OEMs Direct
Yes, the offset is basically they have given a two-year plan that for the OEMs they have 25% tariff rate, the first year they can get a refund of 15% from the government, the second year they will get a refund of 10%, and in the third year it will be reviewed depending on what happens. But that's what's announced as offset.

Details a specific mechanism for tariff relief for US OEMs, which could indirectly benefit component suppliers by reducing the overall cost burden on their customers.

Asked by Sameen Irani, JP Morgan Chase

Electronics/Servers Business and KPTL Investments Direct
Yes, we set up SMT lines and electronics manufacturing which will be used. ... Second half of this financial.

Confirms the utilization of existing Kalyani Strategic Systems (KPTL) investments for the new electronics manufacturing business and provides a timeline for revenue generation from H2 FY26.

Asked by Sameen Irani, JP Morgan Chase

3 min read 6 chapters

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.

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