At a Glance
Over the past five years, Bharat Forge has evolved from being just another heavyweight in auto components to a diversified beast in defense, aerospace, EVs, and even drones. But behind the flashy MoUs and UAV headlines, did the margins actually improve? Or is the P/E of 60+ just another classic case of hope rally overdose? Let’s dissect this metal giant — one forging at a time.
📦 1. What Does Bharat Forge Actually Do?
- ✅ Auto Components: Legacy business — crankshafts, axles, connecting rods.
- 🛡️ Defense & Aerospace: Towed artillery guns, artillery systems, armored vehicles, and UAVs.
- 🔋 EV & Green Energy: Focused on light-weighting, EV components, and green mobility.
- 🛰️ Subsidiaries & Acquisitions: Kalyani Strategic Systems, Bharat Forge Aerospace, and the latest push into manufacturing drones in partnership with French firms.
From lorries to laser-guided munitions. Respect the pivot.
📉 2. 5-Year Financial Snapshot (FY20–FY25)
| ₹ in Cr | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|---|
| Revenue | 8,056 | 6,336 | 10,461 | 12,910 | 15,682 | 15,123 |
| EBITDA | 1,072 | 832 | 1,983 | 1,737 | 2,562 | 2,690 |
| EBITDA % | 13% | 13% | 19% | 13% | 16% | 18% |
| Net Profit | 349 | -127 | 1,077 | 508 | 910 | 913 |
| Net Profit % | 4.3% | -2% | 10.3% | 3.9% | 5.8% | 6.0% |
| ROCE | 7% | 3% | 11% | 8% | 13% | 13% |
| ROE | 7.5% | -2.7% | 23.2% | 11.4% | 20.4% | 19.7% |
| Debt/Equity | 0.87x | 1.00x | 0.92x | 1.10x | 1.03x | 0.73x |
🔥 2021 was the year Bharat forgot how to make profits. But the bounce-back since is undeniable.
🔍 3. Business Segments – Auto vs Defense vs Others
- 🚗 Auto Segment (60%+ of revenue):
- Mostly cyclical, still their largest cash cow.
- Decline in commercial vehicle exports during FY25.
- 🛡️ Defense + Aerospace (~15%):
- Key MoUs with French partner for UAVs.
- Govt’s push for Make-in-India defense is a tailwind.
- 🔋 EV & Green Energy (~10–12%):
- Focus on lightweight EV components.
- Still not profitable on a standalone basis.
🤖 4. Subsidiaries and Strategic Jugaads
| Subsidiary | Focus Area | FY25 Revenue | Commentary |
|---|---|---|---|
| Kalyani Strategic Systems | Defense artillery | ₹1,000 Cr+ | Cash cow in the making |
| Bharat Forge Aerospace | Aerospace components | ₹400 Cr | Exports rising |
| Analogic Controls (Acquired) | Defense electronics | ~₹150 Cr | UAV electronics opportunity |
👉 Basically, Kalyani is building a defense PSU — minus the PSU attitude.
📉 5. Valuation – Has the Stock Forged Too Far?
- Current Price: ₹1,298
- Market Cap: ₹62,000 Cr
- P/E (TTM): 61.6x — Bruh.
- Book Value: ₹194 → P/B = 6.7x
- Dividend Yield: 0.65% (basically, nothing burger)
🧠 Fair Value Range Calculation:
Let’s assume:
- Normalized EPS: ₹20 (based on FY25)
- Reasonable P/E range: 25–35x
FV Range = ₹500 – ₹700
🔔 Translation: You’re currently paying defense PSU premium for an auto cyclical with UAV dreams.
💰 6. Cash Flow & Debt – Better, But Not Beautiful
- FY25 Operating Cash Flow: ₹1,796 Cr ✅
- Capex (Investing): ₹1,964 Cr ❌
- Free Cash Flow: Negative again (because Bharat Forge doesn’t believe in saving)
- Debt Trend:
- FY23: ₹7,313 Cr → FY25: ₹6,698 Cr
- So finally deleveraging? Or just window dressing?
⛽ Cash conversion cycle has improved, but inventory days have gone up. Efficiency remains a work in progress.
🏁 7. Promoters, Shareholders, and FII Gyaan
| Category | FY23 | FY24 | FY25 |
|---|---|---|---|
| Promoters | 45.26% | 44.07% | 44.07% |
| FIIs | 16.48% | 17.87% | 16.08% |
| DIIs | 28.06% | 28.35% | 30.20% |
| Public | 10.04% | 9.55% | 9.49% |
📌 DIIs are bullish, FIIs are flaky, promoters stable — but why no buying at ₹1,298?
🧾 Final Verdict: Forging a New Narrative — But Mind the P/E
- ✅ Diversified biz now beyond auto – defense, aerospace, EVs
- ✅ Margins have improved — 18% OPM in FY25
- ✅ Kalyani Strategic Systems may become the next defense unicorn
- ❌ Valuation is high – P/E of 60+ is unwarranted
- ❌ FCF negative in FY25 despite ₹15,000 Cr revenue
📉 FV Range: ₹500 – ₹700 — Wait for a better price if you love the defense story. Because at this valuation, even ISRO would look expensive.
✍️ Written by Prashant | 📅 18 June 2025
Tags: Bharat Forge, Kalyani Group, Defense Manufacturing, Auto Components, Indian Stocks, EduInvesting Recap, 5-Year Financials, Multibagger or Meh?
