Bharat Forge reported modest financial results for the fourth quarter of fiscal year 2026 (Q4FY26) but outlined optimistic prospects for growth in the coming years, particularly in defence, aerospace, and data centre businesses. The company’s standalone adjusted earnings for Q4FY26 stood at approximately ₹370 crore, with revenues increasing 4.5% year-on-year (Y-o-Y) to around ₹2,260 crore. However, volumes fell 8% Y-o-Y to 62,201 million tonnes, while realisations rose 13.1% Y-o-Y to nearly ₹363 per kg.

The auto segment faced a 7.1% Y-o-Y decline in revenue to about ₹1,060 crore, whereas non-auto revenue expanded 17.5% Y-o-Y to approximately ₹1,210 crore. Export revenue dropped 12% Y-o-Y to about ₹1,080 crore due to global market softness and geopolitical tensions but improved 19% quarter-on-quarter (Q-o-Q) on the back of inventory restocking and a recovery in U.S. truck production. Passenger vehicle exports remained robust, fueled by strong demand in North and Central America. Within exports, aerospace shipments were strong and high horsepower engines remained stable, while the oil and gas segment underperformed. Overall export revenue for FY26 declined 15.2% Y-o-Y to roughly ₹4,010 crore, largely due to extended destocking in the U.S. truck market.

Domestically, commercial vehicle (CV) revenue showed strength, with overall domestic auto revenue growing 32% Y-o-Y. Operating profit margin held steady at 27.3% Q-o-Q, supported by a healthy balance sheet, with the net debt-to-equity ratio remaining low at 0.18. During the year, Bharat Forge acquired a 30% stake in Fortuna Engineering for about ₹130 crore.

On a consolidated basis, revenue for Q4FY26 rose 17.5% Y-o-Y to approximately ₹4,530 crore, though net profit declined 17% to around ₹233 crore. Margins contracted by 50 basis points Y-o-Y to 17.2%, despite improvements in overseas subsidiary margins, which increased to 3.7% from 1.2% a year earlier. For the full fiscal year 2026, consolidated revenue rose 11% to nearly ₹16,811 crore, operating profit increased 9%, and net profit was up 18% to about ₹1,090 crore. Free cash flow for FY26 improved to ₹370 crore following capital expenditures of approximately ₹1,100 crore.

Looking ahead to FY27, Bharat Forge projects 25% revenue growth in its Indian manufacturing operations, assuming no major geopolitical disruptions. The company attributes expected margin improvements to strong execution, a recovering export market, and solid demand in India and the U.S. Growth is anticipated to be led by aerospace, followed by defence and auto components.

Defence revenue for FY26 amounted to roughly ₹1,560 crore, with the order book standing near ₹11,000 crore at year-end, providing multi-year revenue visibility. The ramp-up in Advanced Towed Artillery Gun System (ATAGS) production and the commercialisation of close quarter battle (CQB) carbines are expected to contribute to revenues from the second half of FY27. Bharat Forge is also pursuing emerging opportunities in Europe, supported by recent order wins.

Aerospace contributed about ₹400 crore in revenue for FY26 and accounted for 26% of industrial export revenue in Q4FY26. The company expects strong double-digit growth in this segment, driven by global outsourcing trends, new contract wins, and deepening partnerships with aerospace original equipment manufacturers (OEMs).

Strategically, Bharat Forge is diversifying beyond medium and heavy commercial vehicles (MHCVs) into electric vehicle (EV) platforms. Its subsidiary JS Autocast reported FY26 revenue of approximately ₹760 crore and an operating profit near ₹100 crore, although a slowdown in the wind business caused some near-term softness.

Management anticipates consolidated annual revenue growth in the mid-teens through FY28, alongside higher margins and operating profits. Moving into multiple sectors aims to mitigate cyclicality risks, although geopolitical tensions remain a significant concern. The recent surge in Bharat Forge’s share price suggests that investors have priced in these positive factors, with valuations currently trading at about 56 times expected FY27 earnings.