Bharat Forge shares plunge 9% as Q1 earnings disappoint; margin pressure, overseas woes in focus

Shares of Bharat Forge fell sharply on Monday after the company reported its June quarter results, with the stock declining as much as 9.2% to an intraday low of ₹2,077.20 on the NSE, compared with the previous close of ₹2,056.10.

The sell-off came despite an 18.7% year-on-year increase in consolidated revenue to ₹4,639.9 crore from ₹3,908.7 crore. The company's profitability growth, however, remained much weaker than its topline expansion.

EBITDA rose 5.4% to ₹709.4 crore from ₹672.8 crore, while EBITDA margin declined to 15.29% from 17.21% a year ago. EBIT was largely flat at around ₹446.2 crore, compared with ₹446.8 crore in Q1 FY26.

The company reported a consolidated net loss of ₹89.9 crore, against a net profit of ₹283.9 crore in the year-ago quarter. The quarter was impacted by ₹358 crore of exceptional items, including restructuring-related costs at its German subsidiary.

Overseas operations remain a concern

Bharat Forge's consolidated financial reconciliation showed revenue from overseas operations at ₹1,535.2 crore, up from ₹1,429.8 crore a year ago. However, overseas EBITDA fell sharply to ₹26.2 crore from ₹55.8 crore, pulling the margin down to 1.7% from 3.9%.

The company has also initiated restructuring at German subsidiary Bharat Forge CDP GmbH, which it said was facing market challenges and associated cost disadvantages. The group recorded a ₹330.4-crore restructuring provision during the quarter.

B.N. Kalyani, chairman and managing director, said the company was continuing to reassess parts of its global manufacturing footprint.

"With the recent restructuring action on our EV business and the German Forging business, we continue to re-evaluate our current global manufacturing footprint for the other parts of the business where the medium-term focus of achieving profitability may continue to be challenging," said he added.

Semiconductor push, ₹2,500 crore fundraise

Alongside the results, Bharat Forge's board approved the incorporation of a direct or indirect subsidiary in Malaysia to undertake activities in semiconductors and allied areas, subject to the necessary approvals and formalities. The company has not disclosed an investment amount for the proposed entity.

The company is also setting up dedicated forging and machining capabilities for newer sectors including defence, aerospace, data centres and semiconductors, with an investment outlay of around ₹1,800 crore over 12-18 months.

Bharat Forge's board has separately approved a fundraise of up to ₹2,500 crore, subject to shareholder and regulatory approvals.

Despite the near-term pressure, the company maintained its 20-25% FY27 growth outlook for its Indian manufacturing business. Kalyani said the growth would be “more pronounced in the 2nd half of this fiscal.”

The company also highlighted new orders worth ₹1,352 crore won by its Indian operations during Q1, including ₹681 crore from defence, with the defence order book standing at ₹11,196 crore as of June 30.