Bharat Forge expects ATAGS deliveries to start in Q1 FY28

Bharat Forge Limited expects shipments of 184 Advanced Towed Artillery Gun System (ATAGS) guns to start in Q1 FY28 after production approval came through, with delivery spread over about four years. Management said the clearance, rather than the order itself, had been delayed, moving ATAGS revenue recognition to FY28.

Why will Bharat Forge start ATAGS deliveries in Q1 FY28?

Bharat Forge will start ATAGS shipments in Q1 FY28 because the required production approval has now been received. Management corrected an analyst’s reference to an order deferment, saying the ATAGS order was not deferred and that the delay applied to production approval, which had held back the start of shipment.

The distinction sets the timing of revenue recognition rather than changing the 184-gun order. Before ATAGS contributes in FY28, management said defence business won during the preceding 6 to 12 months, including engineering procurement contracts, should materialise in the second half of FY27 and support both defence revenue and profit.

Bharat Forge also said its expected 20% to 25% revenue growth was not dependent on ATAGS in the near term. Management cited aerospace, industrial exports, semiconductor work, commercial vehicles, passenger-car exports, marine operations, JSA and K-Drive as programmes moving into revenue, with the second half expected to be stronger than the first half.

How will Bharat Forge deliver the 184 ATAGS guns?

Bharat Forge expects to deliver the 184 ATAGS guns over about four years, with the first year being a ramp-up and the second and third years more steady. Management gave an indicative sequence of about 10%, then 15%, then 20%, a similar amount and the remaining balance, while maintaining that actual deliveries depend on the customer’s absorption schedule.

The delivery pace will be shaped by induction rather than manufacturing capacity alone. Management said the customer must train battalions on the new artillery platform and decide where to deploy it, making training and induction schedules relevant to the timing of gun acceptance and revenue recognition.

Bharat Forge said it has the ability to build about 120 to 150 large artillery guns annually across mounted, wheeled and towed platforms. That capacity applies across several artillery products, so the 184 ATAGS guns do not represent the company’s entire potential annual artillery output.

What margins does Bharat Forge expect from ATAGS?

Bharat Forge described ATAGS as a product carrying a margin of about 20% to 22%, with high asset turnover. Management said the broader defence business margin can range from 20% to 25%, depending on the product mix supplied rather than on a single programme-level margin.

Management said the initial defence margin may be in the 20% to 21% range under the current product profile. It expects margins to increase by at least 200 to 300 basis points as the business supplies more sophisticated products and fully filled ammunition; 100 basis points equal one percentage point.

ATAGS is therefore within the current defence margin range, while management linked further margin improvement to later changes in product mix. The company did not attribute the potential 200 to 300 basis-point increase solely to the Q1 FY28 ATAGS shipment ramp.

For India manufacturing, Bharat Forge said quarterly sales were running at about Rs 3,000 crore to Rs 3,400 crore with a 22% margin. Management expects sales to exceed Rs 5,000 crore by the end of the following year, with margin accretion of at least 200 to 250 basis points depending on the mix at that time.

How does ATAGS fit into Bharat Forge’s defence order book?

Bharat Forge said its defence order book was about Rs 10,600 crore at the end of the preceding quarter, and that figure includes ATAGS, CQB and other defence work. The order book therefore includes contracts at different stages, including programmes that have not yet received all production clearances.

ATAGS has received production approval and is scheduled to begin shipment in Q1 FY28. CQB, by contrast, had not received bulk production clearance at the time of the call; management said delivery could start within 4 to 6 months after that approval is obtained.

The ATAGS order was booked by Bharat Forge before Kalyani Strategic Systems Limited was established. Management said deliveries will initially be made through Bharat Forge, though the order may be novated later, meaning the programme is currently expected to be recorded through Bharat Forge’s standalone business.

What supports Bharat Forge before ATAGS revenue begins?

Bharat Forge is implementing a brownfield forging and machining expansion in Baramati of about Rs 1,300 crore to support non-automotive growth before ATAGS revenue begins. The plan includes about 100,000 tonnes of additional forging capacity and large machining capacity for aerospace, semiconductor and industrial applications.

Management expects production trials for the first two Baramati assets in January, February and March, followed by a third asset around the middle of the year and the final asset toward year-end. It said the existing facilities had been running close to full capacity for several quarters, making the expansion relevant to the planned ramp in higher-value products.

In semiconductor-related work, Bharat Forge said it was already operating at a double-digit US-dollar-million annual run rate and intended to grow this business by two to three times. The new facility is intended to serve aerospace, semiconductor and industrial sectors, with management citing high-value large parts that had previously not been produced at the intended scale.

Conclusion

Bharat Forge’s ATAGS revenue timing has shifted to Q1 FY28 because production approval was delayed, not because the 184-gun order was postponed. The programme is part of a Rs 10,600 crore defence order book and is expected to be delivered over about four years, with a stated ATAGS margin of about 20% to 22%.

The next factors to watch are the customer’s battalion training and platform-induction schedule, which management said will determine delivery acceptance, and bulk production clearance for CQB, which could start deliveries 4 to 6 months later. Baramati production trials and the expected second-half FY27 contribution from engineering procurement contracts are also disclosed milestones ahead of the ATAGS ramp.