Image Source: Indira Securities
Bharat Forge Ltd., India’s leading auto and defence component manufacturer, released its consolidated financial results for the quarter ended June 30, 2025 (Q1 FY26), showcasing a mixed bag of operational strength and bottom-line pressure. Despite robust revenue growth and margin expansion, the company’s net profit took a hit due to exceptional losses linked to its electric mobility ventures.
Key Financial Highlights
-
Consolidated revenue from operations stood at ₹3,909 crore (₹39.09 billion), marking a 10% year-on-year growth.
-
Consolidated net profit was ₹284 crore (₹2.84 billion), significantly below analyst expectations due to one-time charges.
-
EBITDA rose 18.7% YoY to ₹651.3 crore, with margins expanding by 200 basis points to 28%.
Exceptional Items Drag Bottom Line
The quarter’s profitability was dented by a ₹146 crore exceptional loss, primarily stemming from Bharat Forge’s exposure to its EV subsidiary, Tork Motors Pvt. Ltd. The impairment provision of ₹145.6 crore was recorded in the standalone financials due to adverse developments in the two-wheeler EV market. Additional provisions were made for BF Infrastructure Ltd. and Tevva Motors Ltd., further impacting the bottom line.
Operational Momentum Remains Strong
-
Despite the exceptional losses, Bharat Forge maintained strong operational momentum across its core segments:
-
Defence revenue surged 147% YoY to ₹642 crore, driven by steady execution of export orders.
-
The company secured new orders worth ₹980 crore across defence, castings, and forging businesses.
-
The executable defence order book now stands at ₹5,400 crore, including artillery guns, vehicles, and consumables.
Segmental Performance Snapshot
-
Indian Operations: Continued strength in forgings, castings, and defence businesses supported growth.
-
Oil & Gas Segment: Showed signs of recovery, contributing positively to the EBITDA margin expansion.
-
Overseas Operations: Losses narrowed due to improved operational efficiencies, especially in Europe and North America.
Investor Sentiment and Stock Reaction
The market responded cautiously to the earnings report. Bharat Forge’s stock opened at ₹1,314.90 but closed sharply lower at ₹1,169.10 on August 6, 2025, reflecting an 11% intraday decline. The sell-off was largely attributed to the unexpected exceptional losses and concerns over the EV subsidiary’s future viability.
Strategic Developments and Outlook
-
Bharat Forge approved a fundraise of ₹2,000 crore through debt or equity to strengthen its balance sheet and support future growth.
-
A $12 million loan to its subsidiary will be converted into equity, signaling continued commitment to its EV ambitions despite current setbacks.
-
Management remains optimistic about Q2 FY26, citing strong order visibility and margin resilience.
Conclusion
Bharat Forge’s Q1 FY26 results underscore its operational strength and strategic depth, even as exceptional losses cloud short-term profitability. With a robust order book, expanding margins, and a diversified business model, the company appears well-positioned to navigate near-term challenges and capitalize on long-term growth opportunities.
Source: CNBC-TV18 – August 6, 2025 Moneycontrol – August 6, 2025
Advertisement
Advertisement
