BHARATFORG Q1 FY27 earnings call.
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Revenue
₹4,640 Cr
verified against source
Revenue YoY
18.7%
reported change
EBITDA
₹752 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Bharat Forge delivered a strong Q1 FY27 with consolidated revenue of ₹4,640 crore (+18.7% YoY) and EBITDA of ₹752 crore (+10.3% YoY), though margin compression to 16.2% (vs 26.2% standalone) reflects cost headwinds. Standalone margin of 26.2% was impacted by 160 bps from energy and logistics inflation; normalized would have been ~28%. Defense arm KSSL posted strong performance with order book at ₹11,196 crore, including the largest-ever naval gas turbine generator order for Kolkata-class ships. The company announced a ₹2,500 crore fundraise for growth capex targeting aerospace, semiconductors, large engines, and an energetics plant, while organic capex of ₹1,800 crore is planned for FY27. US operations incurred a loss due to equipment breakdown but recovery expected in Q2. Management projects FY27 and FY28 as strong years with H2 better than H1, driven by defense deliveries (ATAGS, carbines) and export momentum. Risk: ATAGS approval pending, CDP restructuring completion by end-CY27, and US aluminum tariff of 50% constraining margins.
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Guidance to track
- Spread across forging, machining, heat treatment, and quality control in India for both auto and non-auto sectors. Asset turnover targeted above 1.5x with very good margins. Funded from internal cash generation.
- Ring mill in Baramati starting Q4 FY27 and new forging facility will enable step-jump in aerospace production. Management sees strong momentum from Farnborough air show engagements.
- KSSL (defense arm) operating margins strong in Q1. On steady-state annual basis, management guides 22-23% EBITDA margin. Volatility in quarterly margins due to product mix and execution timing.
- H2 FY27 expected more robust with export recovery continuing and commencement of ATAGS/carbine deliveries. Momentum across exports and domestic defense expected to sustain into FY28 barring geopolitical upheavals.
Risks flagged
- Testing ongoing for both suppliers (including Bharat Forge). Management acknowledged procedural delays but confirmed order and product are ready. Timing of formal approval remains uncertain.
- Steel business in Germany undergoing restructuring. Management expects closure Q3-CY27 calendar quarter. Orders will transfer to India at good margins, but products being phased out will not transfer. Impact of €30 million taken for restructuring.
- Raw aluminum faces 50% tariff (all from Canada as US has no smelters). Components from other countries face 10-15% tariffs. Aluminum machining margins targeted at 15-16% but tariff issue must resolve for targets to be achieved. Linked to Canada-US diplomatic tensions.
- Manpower shortage due to Iran war/LPG crisis caused migrant labor to return home, impacting steel sector and sub-suppliers. Fuel switch issues in Maharashtra. Only 70-75% normalization achieved on labor. Maharashtra energy price hike ongoing.
Key quotes
- We expect 27 to be a very good year with the second half being driven more robustly with some of these interruptions behind us and both across exports and the commencement of deliveries for the domestic defense orders of ATAGS and carbines.
- This 2500 is for this current capex and then it'll also give us a strong base for any additional capex that we may need for further growth. We like to have cash on the balance sheet. At least 2000 odd crores of cash on the balance sheet and it's good. It'll help us accelerate our growth going forward.
- On aerospace we will double our business in the next two years or so. And then on the semiconductor side, I think we are aiming for something in the region of 30-40 million of business in the next 2 years organically and then we also have to set up some machining facilities which will then allow us to grow that business almost double it.
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