Summary
Bharat Forge Limited - Q3 FY26 Earnings Call Summary Thursday, February 12, 2026 4:00 PM
Event Participants
Executives 3 Amit Kalyani (Vice Chairman and Joint Managing Director), Kedar Dixit (CFO), Subodh Tandale (Executive Director)
Analysts 6 Aakash Javeri, Abhishek Shah, Amyn Pirani, Gunjan Prithyani, Kapil Singh, Nitin Jain
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Standalone Revenue | ₹2,084 crores | +7% QoQ; Driven by domestic auto growth and defense execution despite export headwinds. |
| Standalone EBITDA | ₹569 crores | +4.6% QoQ; Margin at 27.3% includes ₹31 crore impact from aluminum tariffs. |
| Consolidated Revenue | ₹4,343 crores | Reflects stable overseas subsidiary performance and improving defense execution. |
| Consolidated EBITDA Margin | 17.3% | Stable QoQ; Consol 9M margin stands at 17.5%. |
| New Business Wins | ₹2,388 crores | Total wins in Q3: Defense (₹1,878 cr), Components (₹378 cr), Casting (₹78 cr), K Drive (₹55 cr). |
| Net Debt to Equity | 0.15 | Remains strong; Management expects long-term debt to reduce to ₹600 crores by fiscal end. |
| US Aluminum EBITDA | ₹10 crores | Stable performance; current utilization levels at 65% amid North American PV sentiment. |
| EU Subsidiary EBITDA | ₹39 crores | Utilization at 60-65%; performance impacted by patchy demand and holiday season. |
Geographic & Segment Commentary
- Domestic Automotive: Strong growth witnessed due to GST reforms boosting CV demand; Q4 outlook remains bullish with momentum expected to carry into H1 FY27.
- North America Truck: Export revenues fell 13% QoQ; Class 8 truck revenues down 51% YoY due to destocking, though recent order intake suggests the market has bottomed out.
- Defense: Order book significantly expanded following CQB Carbine and ATAGS commencement; segment expected to grow 30-40% plus in the coming fiscal year.
- Industrial (Oil & Gas/Aerospace): Industrial revenue grew 11% QoQ; Aerospace is flagged for meaningful growth over the next three years as new capacities and programs come online.
Company-Specific & Strategic Commentary
- JS Auto (JSA) Divestment/Investment: Premji Invest acquired a 23% stake in the casting subsidiary at a ₹1,300 crore valuation, representing a 3.5x-4x multiple on the original acquisition cost.
- Odisha Mega Project: Planning a multi-phase expansion including a specialty steel plant (Kalyani Steel), super alloy plant (Saarloha), and forging/machining facilities (Bharat Forge) with a ₹3,000 crore commitment from BFL.
- US Trade Dynamics: The removal of the 25% punitive tariff on Indian aluminum improves competitive positioning and is expected to restart stalled product development cycles with US customers.
- K Drive Acquisition: Recorded muted top-line growth but improved EBITDA margins from 3% to 5% during the quarter.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Defense Revenue Growth | 30% - 40%+ (FY27) | Driven by ATAGS execution and CQB Carbine production commencement. |
| Defense Revenue Mix | 18% - 30% (3-5 Year Horizon) | Aiming to de-risk via multiple verticals (unmanned, marine, aerial) and global supply chains. |
| European Operations | Restructuring Update by FY26-end | Evaluating steel business viability; focus on cost reduction vs. secular demand headwinds. |
| Domestic CV | Strong Q4 FY26 / H1 FY27 | Driven by underlying demand and positive impact of GST-related logistics shifts. |
Risks & Constraints
| Risk | Context |
|---|---|
| European Macro | Management described Europe as having “secular problems” with patchy demand, high costs, and uncertain market recovery. |
| Aluminum Tariffs | While US punitive tariffs were removed, existing aluminum tariffs still impact profitability and demand in the US subsidiary. |
| One-time Labor Costs | A ₹48.7 crore impact was recorded this quarter due to changes in the labor code regarding past service gratuity provisions. |
Q&A Highlights
Defense Strategy & Scale
- Question: How significant can the defense business become in 3-5 years given new wins in drones and marine? (Gunjan Prithyani)
- Answer: Defense has the potential to eventually match the scale of the current overall company by tapping global budgets; we expect the revenue mix to reach 20-30% soon (Amit Kalyani).
JS Auto Strategic Rationale
- Question: Why bring in an external investor (Premji Invest) when the balance sheet is strong? (Amyn Pirani)
- Answer: It provides a different global perspective and bandwidth to accelerate both organic and inorganic growth without further capital calls on Bharat Forge (Amit Kalyani).
US Truck Market Cycle
- Question: Has the global truck business bottomed out? (Kapil Singh)
- Answer: Incoming Class 7 and 8 orders in the US have trended upward over the last two months; we expect a steady, positive trajectory (Subodh Tandale).
Odisha Project Specifics
- Question: What are the details of the ₹17,000 crore Odisha project? (Abhishek Shah)
- Answer: This is a group-wide initiative. Bharat Forge’s portion is up to ₹3,000 crores for forging and machining. It is a future growth phase for when Baramati expansions are complete (Amit Kalyani).
Key Takeaway
Bharat Forge delivered a resilient Q3 FY26, characterized by a 7% sequential growth in standalone revenue despite a sharp 51% YoY decline in the North American truck segment. The company successfully de-risked its portfolio through a surge in defense orders (totaling ₹1,878 crores in Q3) and a strategic stake sale in JS Auto to Premji Invest, valuing the casting business at ₹1,300 crores. While European operations remain a drag due to macro headwinds, management noted that US export markets have bottomed out and the removal of punitive aluminum tariffs improves the margin outlook. Strategic focus now shifts toward scaling the defense vertical—projected to grow 40% in FY27—and initiating the next leg of growth via the Odisha specialty steel and forging cluster. The company remains on a strong footing with a net debt-to-equity ratio of 0.15 and a clear roadmap for aerospace and defense to become dominant revenue contributors.
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