Bharat Forge Limited: Forging Ahead with Domestic Strength and Defence Prowess in Q3 FY26

Bharat Forge Limited, a prominent Indian multinational, has released its financial results for the third quarter and nine months ended December 31, 2025 (Q3 FY26), showcasing a resilient performance amidst a challenging global economic landscape. The company reported a standalone revenue of INR 2,083.7 crore, marking a sequential increase of 7.0%. EBITDA stood at INR 569.4 crore, growing 4.6% quarter-on-quarter, translating to an EBITDA margin of 27.3%. This quarter's performance was significantly bolstered by robust growth in the domestic automotive business and strong execution within the defense sector, even as export markets faced headwinds.

While the North American Commercial Vehicle (CV) market experienced de-stocking, leading to a sharp 51% decline in NA truck revenues compared to Q3 FY25, Bharat Forge's domestic operations provided a strong counterbalance. Export revenues saw a 3% sequential decline, with the auto sector down 13%, but industrials showed an 11% increase. The company's strategic focus on diversifying its revenue streams and strengthening its domestic footprint appears to be paying off, cushioning the impact of global market volatility.

Domestic Resilience and Strategic Defence Wins

The domestic business emerged as a key growth driver, with the CV segment benefiting from higher production volumes across OEMs. This surge was attributed to the positive impact of GST rate cuts, which reduced the total cost of ownership for end-users. Similarly, the domestic passenger car segment witnessed increased demand, also spurred by GST-related benefits. The domestic industrial business demonstrated strong performance, driven by improved execution in the defense sector and solid traction for heavy horse-power engines. Other domestic revenue contributed INR 102.1 crore in Q3 FY26.

In a significant development, Bharat Forge's Aerospace Division secured contracts worth approximately INR 300 crore under the Emergency Procurement – VI (EP-VI) framework. These contracts, for the Indian Army and Navy, involve indigenous unmanned systems such as Intelligence, Surveillance, and Reconnaissance (ISR) platforms and loitering munitions, including Omega One, Omega Nine, Bayonet, and Cleaver. The Omega One was notably displayed at the Army Day Parade, highlighting BFL's advanced capabilities and commitment to 'Atmanirbhar Bharat'. This strategic focus on defense is expected to yield substantial returns, with management projecting 30-40% plus growth in the defense business next year and a potential contribution of 18-20% to overall revenues within two to three years.

Overseas Operations and Subsidiary Performance

Overseas operations presented a mixed picture. The US and European businesses reported modest operating profits, grappling with seasonal weakness in the PV market and broader 'secular problems' in Europe. The company is actively reviewing its European steel manufacturing footprint, with concrete measures expected by the end of the fiscal year to address profitability challenges. The aluminum business in the US was impacted by tariffs, affecting both profitability and demand.

However, the performance of Indian subsidiaries was strong. JS Autocast (JSA), the company's casting business, recorded impressive year-on-year revenue growth of 22% and EBITDA growth of 39%. K-Drive Mobility, a recent acquisition specializing in axle assembly, saw a muted top-line but a sharp jump in profitability, with EBITDA margins improving from 3.1% in Q2 FY26 to 5.1% in Q3 FY26. Management anticipates continued margin improvement for K-Drive Mobility over a three-year timeframe. The successful integration of American Axle, which has seen margins grow by almost 200 basis points and significant new business wins from Indian OEMs, further underscores the company's strategic acquisition capabilities.

Outlook and Strategic Vision

Looking ahead, Bharat Forge's management expresses confidence that the worst is behind them. They anticipate strong domestic and export markets across sectors, with the commencement of ATAGS execution in H2 FY27 expected to drive high double-digit top-line growth and commensurate profitability. The company is also investing strategically in new facilities, including a planned INR 3,000 crore capex for a forging, machining, and potentially casting facility as part of the larger Kalyani Group's INR 17,000 crore Odisha project for specialty steel and super alloys. This long-term vision, coupled with a strong balance sheet (net debt-to-equity of 0.15), positions Bharat Forge for sustained growth and market leadership in its diverse segments.