Bharat Forge Ltd (NSE: BHARATFORG) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Amit B Kalyani — Vice-Chairman & Joint Managing Director
Analysts:
Unidentified Participant
Kapil Singh — Analyst
Gunjan Prithyani — Analyst
Pramod Kumar — Analyst
Amin Pirani — Analyst
Pramod AMTHE — Analyst
Balasubramanian A — Analyst
Viraj Kacharia — Analyst
Mithun Aswath — Analyst
Presentation:
operator
Ladies and gentlemen, welcome to the Q1FY26 earnings conference call hosted by Bharat Forge Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Kalyani, Vice Chairman and Joint Managing Director Bharat Forge Limited. Thank you and over to you sir.
Amit B Kalyani — Vice-Chairman & Joint Managing Director
Good evening ladies and gentlemen and thank you for joining our Quarter one analysts and investor call. We are definitely in very interesting times given the undercurrents. I would take you through first the numbers and then our team will take your Q and A. I have with me our finance and investor relations teams. Q1 revenue for Bharatpurj on a standalone was 2,105 crores which is about down by 2.7%. The uncertainties around the whole tariffs have created a lot of disruption in the global outlook for automotive global in the US and worldwide. The pause in the emission norms have pushed out the effect which was anticipated and some amount of seasonality in the real estate business is also contributed to top line weakness.
Standalone EBITDA in quarter one was 588 crores which is about 6.5% lower due to low utilization and a different product mix. We have absorbed about 14 crores worth of tariff related expense in Q1. At a consolidated level Q1 revenue of 3909 crores which is 1.5% higher. Quarter on quarter EBITDA moved up to 682 crores which is a margin of 17.4% and the consolidated performance showed an improvement on the back of better profitability in the overseas business and reduction of losses in the Kalyani powertrain. During the quarter we have secured new business worth about 588crores. Sorry about 900crores which is Bharat Forge 429, Defense 269 and JSA about 149.
On the overseas subsidiaries our EU aluminum operations were stable, utilization levels are at about 70% and we had an EBITDA of about 38.3crores. The US aluminum business had a fairly decent quarter driven by operational efficiencies and better utilization with second consecutive quarter of positive EBITDA margins of 6.1% in quarter one and current utilization levels for the aluminum business is also about 70% of phase one volumes. We will continue to evaluate the restructuring options for the European steel business and we’ll update you on the progress in due course. I think we put up a fairly decent show given the current circumstances which continue to evolve as we speak.
Tariff related uncertainty is definitely something that nobody has ever experienced before and it’s something that we are engaged with our customers in finding a resolution. I just want to highlight to you that only about 1/3 of our exports from our Indian manufacturing I.e. bharat Forge, I.e. india manufacturing which is BFL plus industrial plus defense etc. Were to the United States in Q1. Our overseas aluminum operations have turned a corner driven by high utilization rates and better operating metrics in India. A wide portfolio across steel forging, ferrous and aluminum casting is helping us increase our content per customer across sectors and geographies.
In the medium to longer term you will see the center of gravity shift back to our India operations as manufacturing in India becomes larger and more lucrative and we are already seeing opportunities emerge for machine tools for supply to emerging sectors in domestic market as well. Our acquisition of the American Axles India CV assets is another step to build upon our India PET and to add more value added product in our lineup. This gives us access to the thriving light commercial vehicle and SUV segments as well. In addition to manufacturing facilities, these assets provide us with vital engineering know how to design axles and approved axle designs the good RFQ pipeline in the defense business.
We expect to see some orders getting finalized. Additionally in this fiscal Q2 looks a little weaker driven by US exports and hopefully marks a low for this cycle. Second half should be better than the first half. Talking about the rest of the year, we expect that Aerospace should continue its 20 plus percent growth annually. This business has limited exposure to the US market. American axles should add about 1000 crores to the consolidated top line for the year. We will see IT consolidate from quarter two FY26 steel Europe as I mentioned in six months we will have a roadmap in place which will outline the entire process that we will Undertake for this Q1 in JSA is a seasonally weak quarter aggravated by tariff uncertainty and some amount of slowdown in the renewable energy sector due to the pullback on renewables in the United States.
I think to sum it up from where we are today we should see positive momentum in new stores and performance especially in second half and like the past we will use this period to pivot and come out stronger than before. Thank you very much. I will now have my team answer your questions.
Questions and Answers:
operator
Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Kapil Singh from Nomura. Please go ahead, sir.
Kapil Singh
Good evening, sir. Indeed a tough quarter. But I would say a good performance considering the circumstances. Just wanted to ask you regarding the tariffs. You know, firstly a more fundamental question. Who bears the tariffs? Is it, you know, distributed across the entire chain of customer OEM and suppliers? Does Bharat Code need to bear more? Just, you know, your perspective on this thing.
Amit B Kalyani
So you’re asking essentially how is the tariff compensated? Who is paying?
Kapil Singh
Yes, yes. So how like so right now, you know,
Amit B Kalyani
irrespective of who pays the tariff, whether it’s a customer, you know, whether we pay the tariff or the customer pay the tariff, end of the day it is compensated in price. And usually what happens is customers work with us to find such solutions. Because obviously these are extraordinary circumstances. And given the fact that we provide critical products, all customers are working with us to find suitable solutions. Because that is the need of the hour right now.
Kapil Singh
Okay. And this 14 crores impact that we born, that was that for the full quarter or was that for part period?
Amit B Kalyani
No, no, that was the full quarter.
Kapil Singh
Okay. So tariffs were applicable for full quarter?
Amit B Kalyani
Yes.
Kapil Singh
Okay.
Kapil Singh
The second question is, you know, currently, you know, with the tariff currently at 25, how is the, you know, competitiveness of Indian exports and which are the geographies from which we are facing competition for products like rankshaft and Contaxim?
Amit B Kalyani
So let me just, I’ll answer this in a very simple way. All the countries that produce these parts have the same tariffs. I mean either we are the lowest or we are equal to what anybody else is. Nobody is lower than India. The other two geographies are China plus another one, both of which are at higher levels.
Kapil Singh
Okay. And is there a case that you need to think about setting up manufacturing for some of these products in US and if the tariff uncertainty is affecting any other inflow from the customers as well, that would be the question for me.
Amit B Kalyani
We are not looking at setting up any other facilities right now anywhere outside India on order inflows. I think I’ll let Subodh answer that. At this point there is no impact on order inflows. Because typically for the products that we are engaged with, it takes anywhere between two to four, three years to complete the whole approval and validation cycle, even if we have to move it anywhere. So it’s a very complex process. So currently there is no impact on the order flow because of this reason.
Kapil Singh
Okay, thank you sir.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. Should you have any follow up questions, we would request you to rejoin the queue. The next question is from the line of Gunjan from Bank of America. Please go ahead. Yeah, hi.
Gunjan Prithyani
Thanks for taking my questions. Just one quick follow up on tariff and then get to the rest of the business. You mentioned in the prior call that the tariff was different for industrial and autos, right? Is there any change to that with the recent 25% imposition? Does the industrial also get, you know, get, you know, has the same tariff now that that that CV part of the business also gets impacted and see 25% implication on that.
Amit B Kalyani
Currently that is the scenario and that is under evaluation by the US government as well.
Gunjan Prithyani
And this 14 crore, again you know what Kapil was asking. You know, the tariff is applicable only when the shipment reaches us. In which case you know, the tariff would have been applicable only maybe you know, towards June or something. So is it fair to assume that we will see more impact of tariff going into the second quarter even for.
Amit B Kalyani
This tariff that is applicable now. The. The effective date of implementation will be 7th of October or something like that. So. So we will have some time for whatever is being shipped. 7th of October, August.
Gunjan Prithyani
Okay. Okay, got it. Let me move on to some other parts. I think maybe you know, will be good to hear from you on the defense bit. You do mention that there is a pipeline. You know, you refer to some pipeline and strong visibility on that. Can you talk a little bit around it? You know, what is it we. What is it we’re seeing? Is it on exports and is it still, you know.
Amit B Kalyani
As you know that we have announced that we had a pipeline of 9000 crores. After which we have one one more tender which has to get converted into a signed order. Once that happens, that will add another 1400 odd crores to our order book.
Gunjan Prithyani
And that’s domestic.
Amit B Kalyani
That’s a combination. This last order that I’m talking about is domestic.
Gunjan Prithyani
Okay, got it. And lastly, just on the.
Amit B Kalyani
Sorry, we have only two.
Gunjan Prithyani
Okay. All right. Thank you.
operator
Thank you. The next question is from the line of Mr. Promod Kumar from UBS. Please go ahead sir.
Pramod Kumar
Yeah, thanks a lot for the opportunity. Amit. Just wanted to understand. You said every country which is exporting into US is either paying as low as India or higher.
Pramod Kumar
But is there no
Amit B Kalyani
for the countries which are producing the same parts?
Pramod Kumar
Yeah, so. But is there no onshore US man, US plant for forging by pension group or anyone which not machining. So on the forging side there could be some competition or cannibalization with the. Sorry,
Amit B Kalyani
not really. I don’t think there’s any capacity. Oh, they don’t have capacity as far as we understand.
Pramod Kumar
Fair enough, fair enough, sir. And yeah, and you did talk about second half being better than first half. I’m just trying to understand the reasoning behind that. And also within the first half, how should then one look at 2Q versus 1Q. Sir, if you can just help us, it will help us navigate this uncertainty in a much better way.
Amit B Kalyani
Honestly. Look, the tariff was around three days ago. Okay. So I think we have to wait to understand the overall situation and then come back to you. This is basis what we are hearing from our customers.
Pramod Kumar
Okay. Okay. Second half assessment is based on what you’re picking up from customers. Basically. Yeah, fair enough sir. And on the different side, last one, we’ve seen that recent orders, the entire situation, what we had in India, even Israel, Iran, that increasing the war theater. The action is moving towards air based system, drones, missiles, anti drones. So what, what is the group strategy? Because you have very deep roots on the land side.
Amit B Kalyani
We have a presence in every sector.
Pramod Kumar
Yeah.
Amit B Kalyani
As you are aware, we signed an agreement with a company called Turgis Gaillard. For mail drones.
Pramod Kumar
Yes.
Amit B Kalyani
We have a solution, right from mail to super light drones. So we have an entire range of airborne unmanned aircraft we have for land based unmanned products and for water based unmanned products.
Pramod Kumar
And if you can just help us understand out of the defense auto backlog, including the 1400 crores, what you’re talking about, how much will be the component of non land systems? Because ATAX is normally what everyone associates Bharat Fords with and even the carbide. So if you can just help us understand that.
Amit B Kalyani
See land, when you say it includes specialty vehicles. It includes, you know, artillery systems. It includes lot of things. So artillery itself is about 4000 crores artillery alone. Yeah. So it’s less than half.
Pramod Kumar
And carbines and other stuff, I mean carbons is a recent order, right?
Amit B Kalyani
It’s not yet included in that.
Pramod Kumar
It’s not included in that. Because if I’m not wrong. Media reports such as that. You are L1 already on that?
Amit B Kalyani
Yes, we are L1, but the contract is not yet signed.
Pramod Kumar
And how big that could that opportunity be, sir? Because that’s parts of a large one
Pramod Kumar
discussed that.
Amit B Kalyani
That is 1400 crores.
Pramod Kumar
Okay, that’s 1400 crores. And is the market much larger for such carbide? Because I believe there are procurement at the state government level. Yeah, sounds good. Thanks a lot, sir. Wish you all the best. Thank you.
Amit B Kalyani
Thank you.
operator
Thank you. Participants, you are requested to limit your questions to two per participant. Should you have any follow up questions, we request you to rejoin the queue. The next question is from the line of Amin Perani from JP Morgan. Please go ahead, sir.
Amin Pirani
Yes, hi. Thanks for the opportunity. Am I audible?
Amit B Kalyani
Yes.
operator
Yes, sir.
Amin Pirani
Yes. Two questions. First of all, on the US Aluminum profitability, does this business get any benefit? Because you know the US has imposed tariffs on a lot of that from the profitability side or if you can highlight what is causing the staff improvement in profitability here.
Amit B Kalyani
Well, one factor is that our operating metrics in terms of volume capacity utilization have improved. So that’s really fueling this improvement. And you know, I’m hoping that having a competitive source make in the US will help other US OEMs maintain their MCA requirements. So managing MCA requirements is an important factor. So that would help us with securing new business.
Amin Pirani
Understood. And I think till last you were also mentioning that there was increases.
operator
So there is a static disturbance at your end.
Amin Pirani
Is this better now?
operator
Please go ahead.
Amin Pirani
Yeah, now just saying that I think the last quarter you’re also mentioning that there was some delay in getting the price increases from the customer on the aluminium business. Is now that that behind us now?
Amit B Kalyani
No, it’s not yet done. That’s still. Hello?
Amin Pirani
Yes. Yes, I can hear you.
Amit B Kalyani
That’s not yet done.
Amin Pirani
Okay. Okay. Okay. Nice. I’ll come back in the queue, thanks.
operator
Thank you. The next question is from the line of Mr. Pramod AMK from Incred Capital. Please go ahead.
Pramod AMTHE
Yeah, thanks for the opportunity. So Amit, considering that this tariff overhang has been there for some time in the system, is there any pre buying by the clients which has happened in the last couple of months?
Amit B Kalyani
No.
Pramod AMTHE
Nothing of that sort. Okay, thanks. And second, with regard to the US aluminum 4G, what is the plan now with regard to the second line of capacity, are you advancing that? Looking at the concern
Amit B Kalyani
that’s already under implementation.
Pramod AMTHE
Okay, so it’s on time.
Amit B Kalyani
I mean it’s under installation.
Pramod AMTHE
And there also Capacities have been booked or a little bit.
Amit B Kalyani
Not all of it. We have some empty capacity. We have deliberately kept some capacity empty because we thought that if there is some positive development on the demand in the US and made in the US that will give us some leverage in the future.
Pramod AMTHE
Sure. And the last one is with regard to defense, considering the recent conflict, how are you looking at addressing or adding up more addressable segments to your defense target for next three to five years?
Amit B Kalyani
We are working on multiple areas. You know, we are working on right from, you know, as I mentioned earlier, drones. Right from air, land and sea to air defense to naval guns to lots of other advanced systems. And within all these systems we will have high domestic content. So that’s our, you know, that’s our goal, to have a broad based business.
Pramod AMTHE
Thanks a lot of us.
operator
Thank you. Thank you. The next question is from the line of Mr. Kapil Singh from Nomura. Please go ahead. Sir.
Kapil Singh
Yes, sir. Thanks. Just one follow up on KSSL revenues. You know, they have come off over the last four quarters. Just some understanding as to what is happening over there.
Amit B Kalyani
You know, KSSL’s revenue, don’t look at it on a quarterly basis. Look at it on an annual basis. Because there are a lot of, let’s say, you know, let’s say lumpiness in this business. So I would look at it on an annualized basis and we will see a recovery in Q3 and Q4.
Kapil Singh
Okay. So on an annual basis there should be growth in the revenues.
Amit B Kalyani
That is what we are projecting.
Kapil Singh
Okay. And what percentage of these revenues, you know or what percentage of the supplies go from domestic for this? So from the standalone operations like what is the overlap between the revenues?
Amit B Kalyani
So the forging component, the thing is that old orders that have been taken in B will continue to be, let’s say completed from Biosports. New orders will all come will be from KSSL. It doesn’t make a difference because 100 subsidiary of BFL as well.
Amit B Kalyani
Okay, and what about the A tax done. Where will that be accounted for?
Amit B Kalyani
But as I as also mentioned, we should look at on a consolidated basis because it’s a hundred percent subsidiary of the company.
Kapil Singh
Yeah, understand that. Thank you. That’s it.
operator
Thank you. The next question is from the line of Mr. Bala Subramanian from Ariant Capital. Please go ahead, sir.
Balasubramanian A
Good evening, sir. Thank you so much for the opportunities, sir. Servers and SMT lines are new versus and what kind of business opportunities we are having in coming years. How does, how does this align with government incentives.
Amit B Kalyani
On smt? We have, we have electronics as a part of, you know our business in defense and in EV and other electronics businesses. So we see an opportunity to make electronics components, systems and also some end products as an opportunity for the Indian market and also as a backward integration for defense and EV business. So that is why we have set that up and we are already generating revenue from this and we will also get PLI for this from. We have applied for the PLI for this and hopefully that should come soon.
Balasubramanian A
Okay sir. Especially in construction, mining and aerospace those areas witnessed weak performance. It is a demand side issue or exhibition related and then we can expect a recovery. And secondly if this KPTL E Mobility subsidiary when we can expect breakeven whether it is in H2 or beyond that.
Amit B Kalyani
First of all, first of all aerospace we will have strong growth in the year. Again you have to look at it on a yoy basis. We should see upwards of 20% growth maybe even higher than that. Construction and mining there has been a dip but hopefully that will also improve in the second half. What we are seeing is a growth in construction and mining in India. As the whole infrastructure development in India is taking on. We are working on a few. First of all we have reduced our cost and we have reduced our losses. But for the profit I think it depends on getting a couple of big contracts going which we are working on.
Let’s see. Right now there are challenges in EV for everyone because of the whole no magnets available and things like that. So let’s see.
Balasubramanian A
Thank you.
operator
Thank you. The next question is from the line of Mr. Viraj from Simple. Please go ahead.
Viraj Kacharia
Is it better now?
Amit B Kalyani
Yes.
Viraj Kacharia
Hello.
operator
Please go ahead.
Viraj Kacharia
Yeah, most of my questions, just few questions on AM I think we will start consolidating from Q2. So what is. You know if you look at the past performance last three years we have seen a very good healthy growth in that. So what is driving that and what is our play going forward? Because I think we also co own stake in automotive Excel. So is there any no compete or you know any color you can give? How are we approaching this going forward now and at launch
Amit B Kalyani
we see a. Large opportunity in India in a variety of sectors. Not only on highway but also off highway and in new sectors to get into. So we will continue to pursue growth opportunities in India and grow our business and grow our profitability. That is our. Let’s say that’s what we are after.
Viraj Kacharia
And is there any more compete with automotive action? I mean eventually can we also participate in MHCV or we will be restricted to LCV and cv.
Amit B Kalyani
We are an axle manufacturer, so we will make axles.
Viraj Kacharia
Thank you.
operator
Thank you. The last question for this session is from Mr. Mithun Aswath from Kiva Advisors. Please go ahead.
Mithun Aswath
There was some partnership that would compile. Electronics to manufacture servers in India. Could you highlight in terms of how large these opportunities that you’re getting into. Could be in the next few years?
Amit B Kalyani
Yeah. So, you know, there are three sectors of servers that we are targeting in India. There is one sector where servers have to be made in India. There is a second sector where you have AI based servers and the third is just data servers. So we’re targeting all three. And I believe that there is a large market for servers, something in the order of 20,000 a year, going up to 75,000 a year. And these are large servers. These are not just small servers. So this is a big market and we want to see how we can be a competitive player in this market and a local player.
So right now we’re starting small, but we will build the capability to do much more development and much more value addition in our servers for our customer base over here, especially the niche and specialty customer base.
Mithun Aswath
Thank you.
operator
Thank you. I would now like to hand the conference over to Mr. Amit Kalyani for closing comments. Please go ahead, sir.
Amit B Kalyani
Yeah. So thank you very much, ladies and gentlemen, for your comments and questions. As you know, we are facing unprecedented times, but you know, this company has weathered a lot of downturns and a lot of uncertainty in the past, and we’ve come out stronger because we’ve always looked at our capabilities and expanded into new areas and we’ve worked internally to make ourselves more. And that’s the same thing that we will do this time around also. And I’m quite confident that we will come out stronger and better at the end of this. So thank you very much for your time and interest and I wish you all a very happy evening.
Thank you and good evening.
operator
Thank you on behalf of Bharat Forge. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.