Bharat Forge Share: Defence Revenue Surges, But the Company Still Reports a Loss
The article outlines the fundamentals and moat of the company, which is a multinational engineering and manufacturing company headquartered in Pune, Maharashtra, and the flagship company of the Kalyani Group.
With a market capitalization of Rs 91,191 crore, Bharat Forge Ltd’s share closed at Rs 1,866 per share, down by 2.95 percent from its previous close. The stock of the company gave a return of 53 percent over the last year .
Defence Business Sees Strong Growth
Bharat Forge started FY27 with strong revenue growth, but profitability remained under pressure. Consolidated revenue increased 18.7 percent YoY to Rs 4,640 crore in Q1 FY27, while EBITDA rose 10.3 percent to Rs 752 crore, with the margin at 16.2 percent.
At the same time, Defence continued to gain importance for the company. Bharat Forge secured Rs 681 crore of new Defence orders during the quarter, taking its outstanding Defence order book to Rs 11,196 crore as of June 30, 2026. The company also secured its largest naval order so far for 12 Marine Gas Turbine Generator sets.
Defence Order Book Reaches Rs 11,196 Crore
Defence was among the key areas of growth for Bharat Forge in Q1 FY27. The company secured Rs 681 crore of Defence orders during the quarter, while total orders across its Indian operations stood at Rs 1,352 crore.
The Defence order book now stands at Rs 11,196 crore. The company also signed its largest naval order so far for 12 Marine Gas Turbine Generator sets for Kolkata class ships.
Management said its new Defence facility is expected to enter serial production this year. This facility will support deliveries of products such as ATAGS and CQB carbines, although ATAGS deliveries are dependent on the ongoing testing and approval process.
The company is also expanding its Defence opportunity beyond land systems into marine applications. Management highlighted opportunities across power generation, flight systems and other naval requirements as the company increases its presence in the sector.
ATAGS Could Drive the Next Phase of Growth
Management said the ATAGS approval process is still ongoing, with testing of both suppliers underway. The company expects a delay of a few weeks, after which deliveries could begin within two to three months. This is also one reason why the company's India-linked business growth guidance is now in the range of 20 to 25 percent for FY27.
Management expects the second half of FY27 to be stronger, supported by the start of domestic defence deliveries along with recovery in exports. The company is also targeting a steady-state annual margin of 22 to 23 percent for its defence business.
Why Did Bharat Forge US arm Report Loss?
While revenue grew strongly, margins were affected by higher energy prices, other input costs and logistics expenses. Standalone EBITDA margin came in at 26.2 percent, with management stating that these cost increases had an impact of around 160 basis points.
After normalising for these costs, management said the standalone EBITDA margin would have been almost 28 percent. The overseas operations also affected the quarter. The European business generated revenue of Rs 1,074 crore and EBITDA of Rs 30 crore, resulting in a margin of around 3 percent.
In the US, revenue stood at Rs 461 crore, while the business reported an EBITDA loss of Rs 4 crore. This was mainly due to the breakdown of a couple of presses in the steel operations. Management said the issue has been fixed and recovery is expected from Q2.
The company is also restructuring Bharat Forge CDP in Germany. Management expects the process to be completed by the end of calendar 2027 and has taken an impact of around EUR 30 million towards the restructuring.
What Is the Outlook for FY27?
Bharat Forge plans to invest around Rs 1,800 crore over the next 12 to 18 months in India across Defence, aerospace, semiconductors, energy and other industrial applications. The company also plans dedicated forging and machining capabilities along with an energetics facility in Andhra Pradesh.
The aerospace business, currently at around Rs 400 crore, is expected to double in two years, while the semiconductor business is targeting US$30 to 40 million in revenue over the next two years.
The company has also approved a fundraise of up to Rs 2,500 crore to support its expansion plans. Management expects the India-linked business to grow 20 to 25 percent in FY27, with growth expected to be stronger in the second half. For Defence, the company is targeting a steady-state annual margin of 22 to 23 percent, supported by its Rs 11,196 crore order book and new opportunities across land, marine and other defence systems.
Conclusion
However, the near term will depend on the recovery of overseas operations, moderation in input costs and execution of the large Defence order book. With significant capex planned across new growth areas, management is positioning the company for higher capacity and revenue growth, while margin recovery and execution will remain key factors to watch in FY27.