Tirupati Forge FY26: Growth in the base business, a defence ramp takes shape

Tirupati Forge Limited ended FY26 with a bigger top line but a softer bottom line, as the company absorbed the first-year cost load of two major projects: a new defence manufacturing facility and a solar power unit. Total income rose to INR 1,659.4 million in FY26 from INR 1,162.9 million in FY25, helped by a growing order book and strong demand momentum in the US market. Profit after tax (PAT) moved the other way, easing to INR 62.9 million from INR 78.5 million, reflecting higher depreciation and financing costs as new assets were commissioned.

Quarterly performance showed the same split between operating momentum and near-term pressure. In Q4FY26, revenue declined to INR 430.38 million from INR 492.56 million in Q3FY26, which management linked to headwinds in the traditional business amid global geopolitical tensions. PAT in Q4FY26 fell to INR 15.20 million from INR 20.20 million in Q3FY26. The presentation also highlighted the gap between reported profitability and earnings power after the commissioning phase: adjusted PAT was INR 62.95 million in Q4FY26 versus INR 78.55 million in Q3FY26, after accounting for higher depreciation and interest related to the new defence plant and solar unit.

The core question for investors is how quickly this transition year turns into an earnings upgrade. Management’s narrative is clear: FY26 was about building capacity and capability, while FY27 is positioned as the year when commercial defence production begins and cost savings from solar start to accrue more fully.

The quarter that showed the pressure points

Q4FY26 reflected the reality of operating in export-led industrial markets where demand can shift quickly with geopolitics and supply chains. The company reported Q4FY26 total income of INR 430.38 million, down from INR 492.56 million in Q3FY26. PAT followed, coming in at INR 15.20 million compared with INR 20.20 million in the prior quarter.

The presentation framed the revenue decline as a traditional business headwind driven by geopolitical tension. This matters because Tirupati Forge has meaningful exposure outside India, with 64 percent of revenue attributed to global markets and 55 percent specifically cited as overseas revenue across the USA, Canada, Malaysia, Europe, and African countries. In quarters like Q4FY26, the same international exposure that helped growth earlier in the year can also bring volatility when customers delay orders or logistics become unpredictable.

But Q4FY26 also included the financial impact of new asset commissioning. The company called out higher depreciation and interest costs linked to the defence plant and solar unit, which temporarily moderated profitability. For a manufacturing business, this is a classic shape of a capex cycle: earnings compress early as costs come in before volumes ramp. The more important variable becomes execution speed and how quickly new lines shift from trials to customer shipments.

FY26: strong revenue growth, profits held back by investment phase

At the full-year level, FY26 delivered a sharp step-up in revenue. Total income increased to INR 1,659.4 million from INR 1,162.9 million in FY25. Management attributed the growth to a growing order book and strong demand momentum in the US market.

Profitability, however, did not move in the same direction. PAT came in at INR 62.9 million in FY26 versus INR 78.5 million in FY25. The company described this as temporary, tied primarily to upfront investments in the new defence manufacturing facility and the solar power plant. These projects are intended to support long-term growth and improve operating efficiency, but they add depreciation and financing costs in the initial phase.

This trade-off is central to the FY26 story. The base forging and machining business continued to scale, but the financial statements already carry the weight of future-oriented projects. Investors assessing the year need to separate two timelines: the established export-driven forging franchise, and the emerging defence vertical with a very different margin profile.

Note: The company also cited adjusted PAT of INR 78.55 million in Q3FY26 and INR 62.95 million in Q4FY26 after accounting for higher depreciation and interest costs related to commissioning of the new defence plant and solar unit.

The defence vertical: from commissioning to commercial production

The most consequential update in the presentation was on the defence project for the manufacture of Empty Shell Body 155 MM M107. The company reported that the defence plant has been successfully commissioned. Hot trials have been completed, and balance trials are on track for completion by Q1 FY27. Trial production of shell bodies has also been completed as per required specifications.

The next milestone is commercial production, expected to commence in Q2 FY27, with customer discussions described as being at advanced stages. Management positioned FY27 as a transformative year in the company’s growth journey. The reason is straightforward: the defence vertical is expected to generate annual revenues of approximately INR 2,500 million at full utilization. Revenue contribution is expected to begin in FY27, with full-year impact visible from FY28 onwards.

The margin outlook is equally important. The company expects EBITDA margins from the defence vertical to be upwards of 40 percent. That is structurally higher than what investors typically associate with traditional forging and machining cycles, which are often shaped by raw material swings, export pricing, and demand variability. If execution stays on schedule, the defence business could change the company’s earnings mix and reduce reliance on any single end-market cycle.

A second support pillar in the investment cycle is the solar power project. The company expects the solar plant commissioning to deliver annualized cost savings of approximately INR 20 million. The presentation noted that full benefits accrue upon commencement of commercial production at the defence facility, suggesting that the cost savings become most meaningful when the new plant runs at higher utilization.

Core capabilities and end-market mix: a base that supports the shift

Even as the defence vertical becomes the headline, the company’s established operating base explains why it is positioned to attempt the transition. Tirupati Forge has more than 15 years of experience in manufacturing a wide range of forged and machined components. Its manufacturing unit is spread across 5 acres with in-house testing and R and D labs. Current installed forging capacity is 15,000 TPA, and the company holds certifications including IATF 16949:2016, ISO 9001:2015, PED AD 2000 and CRN.

The asset base is integrated across forging, heat treatment, ring rolling, paint shop, machining, and forming. Forging capacity is 15,000 TPA with hammer capability and job capacity from 0.5 kg to 125 kg single piece weight, and press line forging capacity up to 2 kg. Heat treatment is rated at 1000 kg per hour. Ring rolling is also shown at 15,000 TPA with size range from 150 mm to 800 mm OD. The paint shop is described as a fully automatic dipping and drying paint line with capacity of 60 TPD ready to pack material. Machining capability spans CNC machines ranging from 15 mm to 800 mm OD and fully automatic VMC machines for 1000 mm OD.

The company also highlighted the presence of a 630 Ton Lasco hydraulic extrusion press line, positioning itself among only three firms in India to have installed this press line. This is important context because defence manufacturing demands repeatability, metallurgical control, and process discipline. The ability to run integrated processes and testing under one roof often becomes a competitive advantage when moving into specialized, specification-driven products.

The current revenue mix explains both stability and concentration. By product group, flanges account for 64.33 percent of sales, followed by earth moving parts at 10.72 percent and others at 14.87 percent, with smaller shares across rings, shafts, gears, automotive, agriculture, machinery parts, and railway parts. By customer industry, oil and gas is also cited at 64.33 percent, with construction and mining at 14.87 percent and the rest spread across miscellaneous, automotive, agriculture, machine tools, and railway parts.

This concentration in flanges and oil and gas is not unusual for a forging company, but it does raise the value of diversification. Defence, in this context, is not only a growth bet. It is a portfolio re-balance that could reduce dependence on a single industry cycle and potentially improve margins if the expected defence EBITDA profile plays out.

Market context: forging tailwinds and defence policy support

The presentation anchored the company’s outlook in two structural themes. First is the steady growth expected in the forging industry. The global forging industry is cited with a CAGR of 7.6 percent, with market size projected from USD 81 billion in 2023 to USD 158 billion by 2032. For India, the forging industry is cited with a CAGR of 9.8 percent, with market size rising from 4.9 in 2023 to 9.5 by 2030. Drivers include automotive demand, infrastructure spending, technology improvements in forging, and the broader shift of global OEM sourcing to lower-cost manufacturing hubs supported by Make in India.

Second is defence sector demand, shaped by both domestic policy and global realities. The presentation noted that Make in India has priority in defence budget allocation, with the Ministry of Defence budget cited at INR 6.8 lakh crore and 75 percent earmarked for procurement from domestic manufacturers. It also cited India spending USD 130 billion on military in the next five years, and an India defence sector growth rate of 13 percent CAGR from FY23 to FY30. Globally, defence spending is projected to reach USD 2,546.9 billion by 2028 at a CAGR of 4.9 percent, supported by geopolitical tensions and weapon stock depletion.

For Tirupati Forge, these numbers support the strategic shift described in the chairman’s update. The company is trying to align its next phase of capex with segments where localization, security of supply, and long-term procurement cycles can support steadier utilization and stronger margins.

What investors should track from here

The FY26 story is best described as a transition year with a visible ramp ahead. Revenue growth was strong at the full-year level, but quarterly volatility showed up in Q4FY26, linked to geopolitical tension affecting the traditional export business. At the same time, profitability was compressed by commissioning-phase costs from the new defence plant and solar unit.

From FY27, the focus shifts from building assets to converting them into revenue and cash flows. The defence project has already crossed meaningful technical checkpoints with commissioning, completed hot trials, and successful trial production as per required specifications. The key near-term timeline is completion of balance trials by Q1 FY27 and start of commercial production in Q2 FY27. If this schedule holds, FY27 should show the first revenue contribution from defence, while FY28 is positioned for a fuller year impact.

The potential upside is clear in the company’s own estimates: around INR 2,500 million of annual defence revenue at full utilization and EBITDA margins upwards of 40 percent. The solar unit adds a second lever, with annualized cost savings of around INR 20 million, and the company expects full benefits when commercial production at the defence facility begins.

The investment case, therefore, is no longer only about the forging cycle. It becomes about execution in defence, utilization ramp, and how quickly the higher-margin mix can offset commissioning costs and reduce exposure to export-driven quarterly swings. FY26 set the base. FY27 will test delivery.