Bharat Forge targets FY27 growth with ₹11,000cr defence book

What Baba Kalyani told CNBC-TV18

Bharat Forge Chairman Baba Kalyani said the company has entered the “billion-dollar” semiconductor industry and is already working with three of the world’s five largest semiconductor companies. He added that “major orders” have been secured, without disclosing deal sizes or customer names. The move signals a fresh growth leg beyond the company’s traditional strength in automotive components. Kalyani also flagged a wider push into data centre-linked demand and other new-age industrial markets. He said the company’s investments over the past two years, continuing into the current year, are adding capacity for products aligned to these themes. The messaging positions semiconductors as part of a broader industrial strategy rather than a standalone bet.

A niche semiconductor play linked to lithography equipment

Kalyani said Bharat Forge is working on a new semiconductor project and collaborating with several companies to manufacture parts for lithography machines. Lithography tools are a critical part of the chipmaking equipment chain, and component manufacturing typically requires high precision engineering and quality controls. The company’s stated focus is on supplying parts rather than building a large semiconductor fabrication facility. This is consistent with Bharat Forge’s manufacturing profile, where scaling often happens through machining capability, metallurgical know-how, and process consistency. Management commentary suggests the company is trying to enter a specialised segment with global customers rather than pursue a broad “large semiconductor play.” The company has not shared timelines for commercial production or capacity details for this semiconductor component initiative.

India Semiconductor Mission backdrop and why it matters

The semiconductor push comes as India tries to build a domestic semiconductor ecosystem under the India Semiconductor Mission (ISM). The government has attracted investment commitments of more than ₹165,000 crore across 12 approved semiconductor fabrication, assembly, testing and packaging (ATMP) projects. The programme was launched with an outlay of ₹76,000 crore and is being expanded under ISM 2.0 to include semiconductor equipment, materials and indigenous intellectual property. This expanded scope is relevant for industrial manufacturers aiming to plug into equipment and materials supply chains. For companies like Bharat Forge, the policy direction strengthens the case for building capability in precision components used in chipmaking. It also signals that the ecosystem is being designed to include more than just fabs and packaging units.

Defence reforms and Bharat Forge’s positioning

On defence, Kalyani said the sector has seen its “biggest reform,” and framed the change as a shift from component-level opportunities to platform-level opportunities. He said he expects “a big surge in Indian defence sector over next 5 years.” He also highlighted the company’s export footprint, stating exports form “almost 40% of our total defence sales.” Kalyani said a “major change” is taking place in defence across the world, creating opportunities across India, the US and Europe. These comments align with the company’s repeated emphasis on defence industrialisation and export-led growth. They also suggest Bharat Forge is trying to build a durable order pipeline rather than rely only on cyclical auto demand.

Largest-ever army carbine order and key programmes

Separately, Bharat Forge told CNBC-TV18 that it has secured its largest-ever army carbine order. The company did not disclose the order value or delivery schedule in the provided information. Beyond carbines, Bharat Forge has pointed to programmes such as the Advanced Towed Artillery Gun System (ATAGS) and close quarter battle (CQB) carbines as important drivers. The company has also been in contract negotiations with the Ministry of Defence for procurement of ATAGS and Gun Towing Vehicles (GTVs) for the Indian Army, following acceptance of necessity (AoN) in March 2023. As per the provided details, these negotiations were expected to conclude before the end of FY2024-25. Any revenue translation from these programmes depends on contracting and production ramp-ups, and the company has indicated contributions from H2FY27 onwards.

FY27 growth expectations: manufacturing, aerospace and defence

Bharat Forge has been described as projecting a 25% revenue increase in Indian manufacturing for FY27, despite currently high valuations. Drivers cited include strong execution, recovery in export markets, and healthy demand in India and the US. In commentary attributed to management, the automotive and industrial businesses are expected to deliver over 25% growth, while the defence segment is projected to grow by up to 50%. The company also said growth is expected to be led by aerospace, followed by defence and auto components. It flagged Defence, aerospace, and the JSA Autocast subsidiary as key growth drivers. The company also referenced capacity expansion and long-term business wins that could begin translating into revenue from the end of the current year.

Order book and FY26 defence momentum

Bharat Forge Limited reported on May 7 a sequential recovery in Q4 FY26, supported by improving export demand, domestic automotive momentum, and continued growth in industrial and defence businesses. In FY26, the company secured new orders worth ₹4,814 crore, of which defence contracts accounted for ₹2,816 crore. Its total defence order book stood at ₹10,961 crore at the end of FY26, indicating multi-year revenue visibility. Separately, the defence order book was referenced at around ₹11,000 crore at FY26-end, broadly consistent with the ₹10,961 crore figure. The company has said the ATAG production ramp-up and CQB carbine commercialisation are expected to contribute to revenue from H2FY27. It also noted it is addressing emerging opportunities in Europe, backed by recent order wins.

Capex plans and the supply-chain shift narrative

In a separate discussion on investment plans, management indicated investments of at least ₹4,000-5,000 crore over the next 2-3 years across a few focus areas. This included setting up two large plants, with one already announced and another expected to be discussed with the chief minister before an announcement, with Maharashtra mentioned as a likely location. The company linked these investments to capacity for products that go into data centre markets and the semiconductor market. Management also referenced a global supply chain shift towards India, stating that the company has secured a “large amount of long-term business” that would translate into revenue starting from the end of the year. These comments provide context for why Bharat Forge is adding capacity even as parts of the global auto cycle remain uneven.

Key numbers at a glance

Market impact and why investors are watching

The company’s semiconductor component entry adds a new narrative layer to an already expanding defence and aerospace thesis. From a market perspective, the most concrete anchor remains the defence order book of ₹10,961 crore at FY26-end and the expectation that key programmes like ATAGS and CQB carbines begin contributing from H2FY27. The semiconductor initiative, while strategically relevant, has limited disclosed financial detail in the available information, making execution milestones and customer ramp-ups important signposts. The ISM policy push, especially the expansion to equipment and materials under ISM 2.0, strengthens the domestic ecosystem argument for component makers. Meanwhile, export exposure in defence, cited at almost 40% of defence sales, ties the growth story to international procurement cycles and compliance requirements. For investors, the near-term monitorables are order conversion, production ramp-up timing, and how fast new capacity gets utilised across defence, aerospace, data centre-linked products, and semiconductor components.

Conclusion

Bharat Forge is trying to extend its manufacturing playbook into semiconductor equipment components while leaning on a large defence order book and an aerospace-led growth plan for FY27. The company has pointed to concrete defence order visibility and upcoming ramps from H2FY27. On semiconductors, management says work is underway with leading global players, including parts for lithography machines, but has not shared commercial timelines or order values. The next set of cues is likely to come from any formal announcements on the semiconductor project, updates on defence contracting milestones such as ATAGS, and progress on capacity expansion tied to the ₹4,000-5,000 crore investment plan.