Bharat Forge Q1 FY27: India drives growth, overseas remains the drag

Bharat Forge opened FY27 with a steady quarter in its standalone business and a stronger headline at the consolidated level, even as overseas profitability stayed weak. On a standalone basis, revenue from operations rose to INR 2,347 crore in Q1 FY27, up 11.5% year on year. EBITDA increased to INR 614 crore, up 4.5%, while EBITDA margin moderated to 26.2% versus 27.9% in Q1 FY26.

Management attributed the margin pressure to higher energy, input costs and logistics. It quantified the EBITDA margin impact at about 160 basis points and said margins would have been close to 28% on a normalised basis.

On a consolidated basis, revenue for the quarter was INR 4,640 crore, up 18.7% year on year. EBITDA rose to INR 752 crore, up about 10%, with an EBITDA margin of 16.2%. The consolidated picture reflected the strength of Indian operations and subsidiaries, offset by subdued performance in overseas manufacturing and continued losses in e-mobility.

Exports rebound and defence execution support the quarter

The company reported a second straight quarter of recovery in standalone export revenue. Standalone exports in Q1 FY27 were INR 1,205 crore versus INR 1,075 crore in Q1 FY26.

Within exports, commercial vehicle (CV) exports were INR 479 crore, industrial exports were INR 390 crore and passenger vehicle (PV) exports were INR 335 crore. Management linked the improvement to inventory restocking and a rebound in North American truck production volumes, while PV exports benefited from growth across North America and Europe.

Geographically, the Americas remained the dominant export region at INR 797 crore, followed by Europe at INR 305 crore and Asia Pacific at INR 103 crore.

Domestic standalone revenue was INR 1,017 crore in Q1 FY27 versus INR 916 crore in Q1 FY26. The industrial segment accounted for INR 663 crore and was supported by defence execution, while domestic CV revenue was INR 250 crore and domestic PV revenue was INR 104 crore.

Management acknowledged mid-quarter supply challenges, particularly around labour availability in the broader supply chain and fuel switching issues amid energy volatility.

Consolidated mix: Indian operations strong, overseas and e-mobility lag

The consolidated reconciliation disclosed a clear split in operating performance. In Q1 FY27, Indian operations recorded revenue from operations of INR 3,057 crore with EBITDA of INR 729 crore, implying an EBITDA margin of 23.8%.

Overseas operations recorded revenue from operations of INR 1,535 crore but EBITDA of only INR 26 crore, a margin of 1.7%. E-mobility posted revenue of INR 48 crore and EBITDA of negative INR 3 crore.

Subsidiary disclosures also highlighted a strong quarter for Kalyani Strategic Systems (KSSL), the defence arm. KSSL revenue was INR 423 crore and EBITDA was INR 73 crore, with EBITDA margin improving to 17.2% from 6.9% in Q1 FY26. Management attributed the improvement to better realisations and product mix, while also stating a steady-state annual margin target for the defence business at 22% to 23%.

Overseas performance remained the key weakness. European manufacturing operations posted revenue of INR 1,074 crore and EBITDA of INR 30 crore, while US manufacturing operations posted revenue of INR 462 crore and EBITDA loss of INR 4 crore. Management cited a breakdown of a couple of presses in the US steel operations, leading to almost three months of lost production. It said the issue has been fixed and recovery is expected in Q2.

Orders, capex and the fund raise: building for sunrise sectors

The company’s growth narrative for FY27 is closely tied to defence and adjacent industrial segments. Indian operations won new orders worth INR 1,352 crore in Q1 FY27, including INR 681 crore from defence. The outstanding defence orderbook was INR 11,196 crore as of 30 June 2026.

A highlight for the quarter was the signing of the company’s largest naval order to date: 12 Marine Gas Turbine Generator sets with the Ministry of Defence. Management said the turbine product has already been developed and is going into testing. It added that, initially, the electrical generator will be sourced externally while the turbine will be made in-house. It also stated that the company has tied up turbine MRO with the navy.

On capital allocation, management outlined an India capex program of around INR 1,800 crore over 12 to 18 months to set up dedicated forging and machining capabilities for sunrise sectors such as defence, aerospace, data centres and semiconductors. It specifically referenced an energetics facility in Andhra Pradesh for filling ammunition and making explosives.

The board approved, subject to shareholder approval, a fund raise of up to INR 2,500 crore through equity shares, convertible securities or other instruments. Management said the purpose is to fund growth capex, maintain a conservative cash position, and retain capacity for potential India M&A opportunities.

In response to investor questions, management indicated an asset turnover expectation above 1.5 for this capex program.

Outlook: H2-weighted growth, margin recovery expected but gradual

For FY27, the company reiterated its growth outlook of 20% to 25% for the Indian manufacturing business, with growth expected to be more pronounced in the second half. Management also said Q2 should be better than Q1 as discussions with customers on cost recovery progress, though it cautioned that margin recovery will appear gradual due to the way recoveries affect both revenue and costs.

Aerospace and semiconductors were positioned as meaningful medium-term growth drivers. Management said aerospace is currently about INR 400 crore in revenue and expects it to double over the next two years. On semiconductors, it targeted about USD 30 to 40 million of business over the next two years organically, with additional machining investments enabling further growth.

At the same time, management signalled continued re-evaluation of the global manufacturing footprint, especially after restructuring actions in the EV business and the German forging business where profitability may remain challenging in the medium term.

Key investor takeaways

Bharat Forge’s Q1 FY27 performance reinforced the structural strength of its India manufacturing franchise, supported by export recovery and defence execution. The quarter also exposed the persistence of overseas profitability challenges, where operational issues and restructuring continue to weigh on consolidated margins.

The next few quarters will be shaped by three operational proof points: conversion of the defence orderbook into deliveries, commissioning and ramp-up of the INR 1,800 crore capex pipeline, and stabilisation of overseas operations after breakdown-related disruptions and the planned restructuring path in Germany.