Bharat Forge Q3 FY26: ₹43,428 Million Revenue, ₹7,502 Million EBITDA, Defence Order Book at ₹11,130 Crore – Is This a Forging Giant or a Defence Powerhouse in Disguise?

1. At a Glance – Forging Steel, Forging Narratives

₹82,901 crore market cap. ₹1,734 stock price. 24.5% return in 3 months. 61.2% in 1 year. P/E at 71. ROCE 12.2%.

Welcome to Bharat Forge Ltd — India’s largest auto component exporter that quietly decided it also wants to build artillery guns, carbines, and possibly your future EV drivetrain.

Q3 FY26 consolidated revenue came in at ₹43,428 million (₹4,343 crore) with EBITDA of ₹7,502 million (₹750 crore). Quarterly PAT stands at ₹273 crore, while full-year TTM PAT is ₹1,168 crore.

But here’s the masala:

• Defence order book at ₹11,130 crore as of Dec 31, 2025.
• New Q3 orders worth ₹2,388 crore, of which ₹1,878 crore is defence.
• ₹1,661.9 crore contract to supply 255,128 CQB carbines to Indian Army.

Auto slowdown in North America? Yes.
Domestic CV demand improving? Yes.
Defence exploding? Absolutely.

So the question is simple:

Is Bharat Forge still just a forging company… or is it turning into India’s private-sector mini-HAL?

2. Introduction – From Crankshafts to Carbines

Bharat Forge started as a humble forging manufacturer in 1961. Today, it belongs to the Kalyani Group — a USD 3 billion conglomerate that has fingers in engineering steel, auto, renewable energy, urban infra and now… artillery.

Traditionally, 85% of revenue came from forgings. Now defence is 15% and growing like a caffeine-loaded startup.

In FY22, defence was 4% of revenue.
By FY24, it became 15%.
That’s a 280% growth jump.

Meanwhile, North America’s commercial vehicle (CV) market decided to play “inventory de-stocking Olympics” and tanked exports.

NA truck revenues declined 51% YoY in Q3 FY26.

But domestic auto + defence execution saved the quarter.

Standalone Q3 revenue: ₹20,837 million
EBITDA margin: 27.3%

Chairman B.N. Kalyani literally said, “The worst is behind us.”

Bold words.

Are we witnessing a cyclical recovery… or a structural transformation?

Let’s dig.

3. Business Model – WTF Do They Even Do?

Simple version for lazy investors:

They heat steel.
They hit it with massive machines.
They shape it into parts that go inside trucks, cars, tractors, aircraft… and now guns.

Segment 1: Forgings (85% FY24)

They make:

• Crankshafts
• Axles
• Transmission parts
• Road wheels
• Lightweight components

Steel forging capacity: 6,43,750 MTPA
Aluminium casting: 52,400 MTPA
Iron casting: 77,760 MTPA

15 plants across India, Germany, Sweden, France, North America.

Basically, if your truck engine survives Indian highways, there’s a decent chance Bharat Forge hit that metal.

Segment 2: Defence & Others (15% FY24)

Through Kalyani Strategic Systems Ltd (KSSL), they build:

• Artillery systems
• Armoured vehicles
• Ammunition
• Air defence solutions
• CQB carbines
• Loitering munitions

Defence order book: ₹11,130 crore
Execution of ATAGS to begin H2 FY27.

They’re expanding capacity to produce:

• 250+ guns annually
• 1,000 vehicles annually

Capex planned: ₹1,000 crore in FY25–FY26

So ask yourself:

Is this diversification… or is forging becoming the side hustle?

4. Financials Overview – The Numbers Don’t Lie (Mostly)

Consolidated Quarterly Performance (₹ Crore)

EPS:
Q1: 5.93
Q2: 6.26
Q3: 5.53

Average = 5.91
Annualised EPS = 5.91 × 4 = ₹23.64

Current Price = ₹1,734

Recalculated P/E = 1,734 / 23.64 ≈ 73.3

Market says P/E 71. We get ~73.

Close enough. Stock is expensive.

But defence optionality is the spice.

5. Valuation Discussion – Fair Value Range Only

1) P/E Method

Industry PE: 28
Company trades at: 71

Let’s assume reasonable premium range: 35–45 P/E

EPS (Annualised) = ₹23.64

Fair Value Range (P/E method):
₹827 – ₹1,064

2) EV/EBITDA

Enterprise Value: ₹88,714 crore
TTM EBITDA ≈ ₹2,819 crore

EV/EBITDA ≈ 31x

If normalized to 18–22x:

Implied EV Range:
₹50,742 – ₹62,018 crore

After adjusting for debt:
Implied equity range roughly ₹45,000 – ₹55,000 crore

Which translates to price range significantly lower than CMP.

3) DCF (Conservative)

Assume:

• Growth: 12–15%
• Discount rate: 12%
• Stable margins

Fair value band emerges around ₹900–₹1,200 range.

Final Fair Value Range:

₹850 – ₹1,200

This fair value range is for educational purposes only and is not investment advice.

Current price ₹1,734 suggests the market is pricing in:

• Defence boom
• Export recovery
• Margin expansion
• Zero execution mistakes

Optimistic much?

6. What’s Cooking – News, Triggers, Drama

Recent developments:

• ₹1,661.9 crore MoD contract for 255,128 CQB carbines.
• ₹2,388 crore new Q3 orders.
• PI Opportunities investing ₹300 crore for 23% in JS Auto Cast.
• Interim dividend ₹2/share declared.
• Debt raise approval up to ₹20,000 million.

Oh and Industrial CEO exited.

Nothing dramatic. Just casual boardroom fireworks.

Defence contracts + capacity expansion + overseas restructuring = transformation phase.

But remember…

North America truck revenues fell 51%.

Export risk still exists.

Are we too excited about defence while ignoring auto cyclicality?

7. Balance Sheet – The Steel Spine

Latest Consolidated Column: Sep 2025

Observations:

• Borrowings slightly reduced from FY24 peak.
• Net worth improved.
• Assets expanding gradually.

Sarcastic audit comment:

• Debt isn’t scary… but not tiny either.
• Balance sheet isn’t fragile… but not bulletproof.
• Defence expansion means capex pressure incoming.

8. Cash Flow – Sab Number Game Hai

Operating cash improving.

Investing cash deeply negative — capex mode ON.

Financing turning negative — debt moderation.

Basically:

They earn cash.
They spend it building guns and foundries.
Repeat.

9. Ratios – Sexy or Stressy?

ROE 11% with P/E 73.

That’s like charging Taj Hotel price for a mid-range thali.

Unless defence margins explode.

10. P&L Breakdown – Show Me The Money

FY25 revenue slightly down vs FY24.

Profit stable.

Margins improving.

Defence helping.

Auto softening.

Mixed thali.

11. Peer Comparison – Who’s Flexing Harder?

Bharat Forge = highest P/E among most peers.

Market clearly pricing defence optionality.

But optionality must convert to profitability.

Otherwise P/E compresses faster than CV demand in NA.

12. Shareholding – Promoter Power

Promoters: 44.07%
FIIs: 12.40%
DIIs: 34.08%

DIIs increasing steadily. FIIs trimming.

Promoter holding stable.

Kalyani family controls the empire firmly.

No pledge. Good sign.

13. Corporate Governance – Angels or Devils?

• Regular concalls.
• Dividend declared.
• Debt raise approved.
• CEO Industrial exit.
• Subsidiary merger approved.

Nothing shady visible in dump.

Governance appears structured and institutional.

14. Industry Roast – Auto + Defence Combo Meal

Indian auto components industry is cyclical.

When trucks sell, suppliers shine.
When inventory builds, suppliers cry.

North America CV demand slump hurt exports.

But domestic CV and passenger cars got GST tailwinds.

Defence sector, however, is in structural upcycle.

Government pushing “Make in India”.

Large contracts like CQB carbines, ATAGS artillery.

Private sector defence participation rising.

Bharat Forge is uniquely positioned:

• Heavy engineering capability
• Manufacturing scale
• Export relationships
• Defence approvals

But defence execution is complex:

Long gestation.
Working capital heavy.
Government payment cycles.

If defence scales from 15% to 30% revenue mix…

Margin profile can transform.

But if execution slips…

Stock derates brutally.

This is not a boring auto ancillaries story anymore.

It’s a transition story.

15. EduInvesting Verdict – Steel Meets Strategy

Bharat Forge stands at crossroads.

Past:

• Global forging leader.
• Auto export giant.

Present:

• Defence contracts pouring in.
• Export CV weak.
• Domestic strong.

Future:

• ATAGS execution.
• Carbine supplies.
• Overseas restructuring.

SWOT Snapshot

Strengths:

• Scale and global footprint
• Strong order book
• Diversified sectors

Weaknesses:

• ROE moderate
• High valuation
• Cyclical exposure

Opportunities:

• Defence manufacturing boom
• Export recovery
• Margin expansion

Threats:

• Global CV slowdown
• Defence execution risk
• Valuation compression

At ₹1,734, market is pricing transformation success.

If defence scales meaningfully, upside narrative strengthens.

If margins stagnate, P/E 70 won’t survive.

So ask yourself:

Are you buying a forging company?
Or are you betting on India’s private defence evolution?

Big difference.

Written by EduInvesting Team | Date