Shares of Bharat Forge, a leading manufacturer of forged and machined components, rallied significantly on Thursday following the release of its December-quarter financial results and a dividend announcement. The stock advanced approximately 4% as investors reacted to a robust consolidated performance and an optimistic outlook from management, who suggested the most challenging period for the company may have passed.
Strong Consolidated Results Amid Mixed Standalone Performance
On a consolidated basis, Bharat Forge reported a substantial 25% year-on-year increase in revenue, which reached 4,343 crore rupees for the quarter. Net profit saw an even stronger rise, climbing 28% to 273 crore rupees. A key profitability metric, EBITDA (earnings before interest, tax, depreciation, and amortization), grew by 20% to 750 crore rupees. However, the EBITDA margin contracted slightly to 17.3% from 18% in the year-ago period, which the company attributed to a one-time charge of 55.7 crore rupees.
The standalone financial picture, which reflects the core domestic operations, presented a contrast. Standalone net profit declined by 17% to 288 crore rupees, while revenue saw a marginal dip of 0.6% to 2,083.7 crore rupees. Standalone EBITDA fell 7% to 566.5 crore rupees, with the corresponding margin tightening to 27.2%.
Management Commentary and Strategic Shifts
B. N. Kalyani, Chairman and Managing Director, acknowledged that ongoing de-stocking in the North American commercial vehicle (CV) market continued to pressure the quarter's performance. This industry-wide phenomenon, where customers reduce inventory rather than place new orders, has weighed on export demand for an extended period. However, Kalyani pointed to resilient domestic automotive demand and a growing pipeline of defense contracts as providing a crucial buffer. Striking an optimistic note for the future, he stated, "Looking ahead, the worst is behind us," and projected "high double-digit" revenue growth alongside improved profitability.
The company's strategic pivot towards defense and aerospace was a central theme. Management emphasized that defense is now a significant business vertical, not merely a supplementary operation. They highlighted that the Advanced Towed Artillery Gun System (ATAGS) is expected to move into the execution phase in the second half of fiscal 2027. For the quarter, Bharat Forge secured fresh orders worth 2,388 crore rupees, with defense contracts constituting the bulk at 1,878 crore rupees. The total defense order book stood at a robust 11,130 crore rupees as of December 31, 2025. The company also announced a new contract with India's Ministry of Defence for over 250,000 close-quarter battle (CQB) carbines.
Dividend Declaration and Sequential Trends
In a move welcomed by shareholders, the company's board approved an interim dividend of 2 rupees per share. The record date for eligibility is set for February 18, with the payout scheduled to be completed by March 12, 2026.
Sequentially, standalone revenue showed a 7% improvement from the previous quarter, reaching 2,084 crore rupees, while standalone EBITDA increased 4.6% to 569 crore rupees, pushing the margin to 27.3%. Export revenue, however, declined 3% quarter-over-quarter. This was driven by a 13% drop in automotive exports, partially offset by an 11% rise in industrial exports.
Market Context and Forward Risks
The immediate outlook for Bharat Forge remains nuanced. The company itself noted that a recovery in North American CV demand is contingent on the pace at which customer inventories normalize. Export automotive volumes are not yet free from pressure. Furthermore, while defense offers a promising growth avenue, it introduces its own set of uncertainties. Programs like ATAGS carry risks related to volatile timing, potential schedule delays, and cost escalations, which could pressure margins.
Bharat Forge, part of the diversified Kalyani Group, supplies critical components to automotive and industrial sectors globally. Its foray into defense and aerospace places it in competition with other domestic forgings specialists like Ramkrishna Forgings, as well as larger engineering conglomerates such as Larsen & Toubro, which are also vying for substantial, long-term government contracts. The company's ability to navigate the export market headwinds while successfully scaling its defense business will be key to delivering on its growth projections.