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Informist, Tuesday, Nov. 11, 2025

By Afra Abubacker and Simran Rede

NEW DELHI/MUMBAI – Bharat Forge Ltd. is reviewing its steel operations in Europe and will finalise a restructuring roadmap by the end of the current financial year. The company has been witnessing weak demand in key overseas markets amid seasonality and prevailing sentiments.

Though the company expects the weak export trend to continue in the December quarter as well, it hopes to see an uptick in the March quarter. "I would say Q2 (Jul-Sept) and Q3 (Oct-Dec) should be similar. And hopefully by Q4 (Jan-Mar), we should see it going up," the management said at a post-earnings conference call.

In Jul-Sept, the company's export revenue fell 20% on year and 12% on quarter to INR 9.42 billion, mainly due to a slowdown in the US, especially in passenger and commercial vehicle markets.

The company said the outlook for the North American market remains uncertain, as demand weakness in the region's commercial vehicle segment continues to weigh on exports. "The rapid de-growth in North America's CV (commercial vehicle) market, coupled with inventory restocking, has impacted our export performance, and that is our main reason for the draw," the management said. 

However, the company expects European exports to recover in the coming months. "The European exports do look weak as we sit in November. But they should show signs of recovery because at this point in time, there's a lot of destocking taking place due to the deceleration in the production numbers," it said. 

Despite weak overseas sales, the company's domestic industrial business reported steady performance, driven by better execution in defence and strong traction for heavy-horsepower engines. The domestic commercial vehicle business grew 1.5% on year to INR 2.23 billion. The segment's performance was moderate due to lower production volumes across automobile companies in Jul-Sept, in anticipation of the goods and services tax rate cuts.

Bharat Forge's consolidated revenue from its forgings business rose nearly 9% on year to INR 33.56 billion. This segment accounts for the lion's share of the company's overall revenue. In the preceding quarter, revenue from the forgings segment was INR 35.58 billion. The company's consolidated revenue from the defence segment fell nearly 23% on year but jumped 49% on quarter to INR 3.95 billion. The company's consolidated sales from other operations more than doubled year on year to INR 5.88 billion.

The company is bullish on improving margins and product mix due to ongoing cost rationalisation and value additions. "We've done a lot of cost reduction work. You know, when the quarter started and it looked really bleak, we took a lot of block shutdowns, etc. And we're trying to do more value addition in-house, improve our product mix," the management said. 

The company expects strong growth in the defence and aerospace segments to offset the weakness in exports going ahead. "With multiple growth engines like aerospace, defence, and JS Auto," the management said, would help offset declines in other segments. "In the medium term, we are in the midst of increasing our capacities in India to address opportunities in many new sectors, including aerospace and engineering," it said. 

The aerospace business now accounts for about 13% of the company's industrial exports, and it is expected to grow at a healthy rate amid new orders, the management said. "Aerospace for last year, for the full year, was in the ballpark of about INR 250-odd crores (2.5 billion). I think this year, it should be in excess of INR 350 crores (3.5 billion)," the management said. The company expects growth to continue over the next three years.

For FY26, the company expects aerospace to record stronger growth than last year. "The recent tie-up of orders with global aero engine majors for existing and new programs offers good long-term visibility," it said. During Apr-Sept, the company secured new orders worth INR 15.82 billion, including defence orders of INR 5.59 billion. As of Sept. 30, the defence order book stood at INR 94.67 billion.

The company's wholly-owned subsidiary, Kalyani Strategic Systems Ltd., secured orders from the defence ministry valued at over INR 2.50 billion to supply underwater systems. The order to supply underwater systems is expected to be delivered from their Pune facility within a year. 

"This is for basically unmanned marine systems for the Navy. The underwater domain is a key focus area for us. With India's huge coastline and the interesting neighbourhood that we operate in, we have to protect and secure our Navy and coastal facilities," the management said. On the back of this order, along with other marine, carbine, and other orders, the company expects defence revenue in FY27 to be higher than in FY26. 

For the quarter ended September, Bharat Forge reported a 14% on-year fall in net profit to INR 3.10 billion and a 13% decline in revenue to INR 19.47 billion. On Tuesday, the company's shares closed 5.6% higher at INR 1,402.10 on the National Stock Exchange. End

Edited by Saji George Titus

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