At a Glance
Bharat Gears Ltd (BGL), the veteran gear-maker from 1971, rolled out Q1 FY26 results with revenue of ₹179.8 Cr (+1.2% YoY) and a PAT of just ₹2.2 Cr. Despite the slight growth, margins continue to grind lower than an old truck differential. With ROE at -11.8%, the company is clearly in need of some lubrication in its business model.
1. Introduction
Bharat Gears has been around longer than most of its clients’ trucks, supplying automotive gears and heat treatment furnaces to commercial vehicle and tractor OEMs. While the company has survived multiple auto cycles, FY26 starts with the same story: thin margins, high interest costs, and dependence on other income to stay profitable.
2. Business Model (WTF Do They Even Do?)
- Products: Transmission gears, shafts, ring gears, pinions, differential gears, and sub-assemblies.
- Clients: Heavy/medium truck OEMs, tractors, and off-highway vehicle manufacturers.
- Revenue Drivers: Commercial vehicle production, replacement demand, and export markets.
- Challenge: Low margins and high debt costs eating into earnings.
3. Financials Overview
Q1 FY26 Highlights:
- Revenue: ₹179.8 Cr (+1% YoY)
- EBITDA: ₹9.8 Cr (OPM 5.5%)
- PAT: ₹2.2 Cr (EPS ₹1.07)
- Other Income: ₹1.8 Cr (saves the bottom line)
FY25 Summary:
- Revenue: ₹648 Cr
- PAT: ₹3 Cr (EPS ₹2.08)
- OPM: 4%
The company barely ekes out profits.
4. Valuation
- P/E: Not meaningful (due to low profits)
- P/B: 1.3 (cheap, but with reason)
- EV/EBITDA: ~6x – optically cheap, but high risk.
Fair Value Range: ₹75–₹100 based on cyclical auto outlook.
5. What’s Cooking – News, Triggers, Drama
- Q1 results: Margins improved QoQ (OPM 5.5% vs. -1.8% in Q4 FY25).
- Promoter Update: Late Dr. Raunaq Singh’s stake remains under promoter category.
- Rating Watch: CARE & CRISIL have BGL under review; any downgrade may hit cost of capital.
- Order Flow: Stable demand from tractors, but CV volumes are unpredictable.
6. Balance Sheet
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 407 | 385 | 364 |
| Liabilities | 211 | 200 | 186 |
| Net Worth | 120 | 110 | 113 |
| Borrowings | 116 | 113 | 80 |
Comment: Debt reduction is a plus, but net worth erosion remains a concern.
7. Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 42 | 47 | 49 |
| Investing | -26 | -13 | +2 |
| Financing | -3 | -37 | -51 |
Remark: Financing outflows due to debt repayments.
8. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 8% | -6% | -12% |
| ROCE | 15% | 2% | 2% |
| PAT Margin | 1.7% | -1.5% | 0.5% |
| D/E | 1.0 | 1.0 | 0.7 |
Verdict: Not sexy. Stressy.
9. P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 766 | 663 | 648 |
| EBITDA | 46 | 24 | 25 |
| PAT | 13 | -10 | 3 |
Observation: Revenue falling, profits barely alive.
10. Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Bharat Forge | 15,123 | 923 | 63 |
| Uno Minda | 16,775 | 934 | 66 |
| Endurance Tech | 11,561 | 782 | 47 |
| Bharat Gears | 648 | 3 | NA |
Verdict: Bharat Gears is David in a world of Goliaths – without the slingshot.
11. Miscellaneous – Shareholding, Promoters
- Promoter Holding: 55.3%
- FIIs: 1.2%
- DIIs: negligible
- Public: 43.4%
12. EduInvesting Verdict™
Bharat Gears is an old-school gear-maker stuck in a margin trap. The company’s revenue hasn’t grown meaningfully, profits are wafer-thin, and ROE is negative. The only saving grace is debt reduction and operating cash flow stability. Without aggressive cost control or new high-margin products, BGL risks being a perpetual turnaround story.
SWOT Analysis
- Strengths: Established OEM relationships, wide product range, reduced debt.
- Weaknesses: Low margins, high interest costs, negative ROE.
- Opportunities: Export expansion, tractor segment recovery.
- Threats: Auto cycle downturn, competition from global gear makers.
For investors, this is not a growth gear – it’s a wait-and-watch gear.
Written by EduInvesting Team | 29 July 2025
SEO Tags: Bharat Gears, Auto Ancillary, Q1 FY26 Results
