Bharat Forge Ltd (NSE: BHARATFORG) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Amit Kalyani — Joint Managing Director
Amit Kalyani — Joint Managing Director
Amit Kalyan — Vice-Chairman and Joint Managing Director
Kedar Dixit — Chief Financial Officer
Analysts:
Kunj Maheshwari — Analyst
Amin Pirani — Analyst
Kapil Singh — Analyst
Abhishek Shah — Analyst
Nitin Jain — Analyst
Aakash Javeri — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Bharat Forge Limited Q3 and 9 months F526 earnings conference call. As a reminder, all participant lines should be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touchstone. 4. 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, Mr.
Kalyan.
Amit Kalyan — Vice-Chairman and Joint Managing Director
Thank you. Good afternoon ladies and gentlemen and thank. You for your time and interest in. Joining our earnings call for the third quarter FY26. I trust that you’ve seen the numbers. And gone through what we put out. Before that I’ll introduce you to the. Team that I have with us. I have my colleague from the board Subodh. I have our group cfo. I have our CFO Kedar. Our head of Investor relations Raj and his colleague Chinmay. And we are happy to take you. Through our quarter and. Answer whatever questions you have. So over to Kedar and he’ll take. You through a synopsis.
Kedar Dixit — Chief Financial Officer
Good afternoon everyone. I’ll take you through the standalone business. Highlights for quarter three and nine months ended for FY26. The standalone revenues were up 7% sequentially to about 2,084 crores. And EBITDA at 569 crores which shows a growth of 4.6% quarter over quarter with a EBITDA margin of 27.3%. This includes a tariff cost impact of rupees 31 crore. The performance was aided by strong growth in domestic automotive business and execution of defence order books. Continued destocking in North America truck market had an adverse impact on export revenues in quarter three while the auto sector was down 13%. The industrial witnessed sharp 11% growth. This was mainly on account of improved business in oil and gas aerospace business.
To put things in perspective, North American truck market revenues are down 51% as compared to quarter three of last year. We had a one time impact of 487 million on account of changes in labor code. This is mainly to do with the gratuity provision for the past services. Standalone revenues for nine months was 6135 crores with EBITDA margin at 27.7%. Balance sheet continues to remain strong with debt to equity. Net of cash of only 0.15 at the end of this year. We’ll have a long term date of only 600 crores on our balance sheet. Quarter three consolidated revenues came in at 4343 crores and EBITDA margin at 17.3%.
Stable performance in overseas subsidiaries and improving execution in defence helped the Overall performance. For nine months. Consolidated revenue was 12,284 crores with EBITDA margin of 17.5%. Indian subsidiaries continue to perform well. JSA which is our casting business saw their top line and EBITDA growth by strong 22% and 39% respectively. K Drive which is our recent acquisition saw muted top line but good jump in EBITDA from 3% to about 5% in this quarter. Quarter 3. In last quarter the company had secured new business worth 2,388 crore across all key businesses which includes the component business of 378 crores, defense of 1878 crores, casting 78 crores and K drive 55 crores.
Talking about the overseas subsidiaries, the European operations were stable amidst the patchy demand due to holiday season. Utilizations labels in quarter three were about 60 to 65%. During the quarter, EU operations recorded an EBITDA of 39 crores. US aluminium had a stable quarter. Given the sentiment in North American passenger car market. The US operations recorded EBITDA of about 10 crores for quarter three. The tariff on aluminium into US is impacting the profitability and demand in this business. Current utilization level of aluminium business in the US is about 65% for nine months performance. We continue to work on the improvement in our overseas business.
So for nine months the US losses were down almost 50% and we are seeing lower losses at EU level. And while we continue to improve our operation, we also continue to evaluate restructuring operations for our European steel business. And we will update the progress by end of this fiscal. Now I will hand over to Amit. Sir for his comments.
operator
Speakers please go ahead.
Amit Kalyani — Joint Managing Director
Yes. So ladies and gentlemen, thank you. Just want to tell you that you know we entered into all this uncertainty. Very suddenly and by God’s grace and the government and everybody doing their job, we’ve also come out of this mess in a very sudden manner. I hope that the positivity translates into real action and I see early signs of that. So we have a good amount of confidence that the worst is behind us and that I think we have strengthened our position, we have further developed new products and you will see that evidence in the next few years how we are building new segments for our company which have growth potential and are the. Kind of products and technologies that will. Give us a very good future. I think on the domestic front, the GST reforms have given a boost to the automotive industry and also take the industry players by surprise. In fact, growth was almost unmanageable by them. The recent announcement with the trade deal has also been positive and coupled with the CV market in the US bottoming out and beginning to show higher order intake will also give us a lot of momentum. It’s a deja Vu of 2019 where every period of ours was witnessing a strong growth. I’m also very happy to report that our acquisition of JSA little over two years ago has worked out very well for us.
We have now brought in a very high quality investor in the form of Premji Invest which has invested to take a meaningful stake in the company and it’s 23% at a valuation of 400,300 crores. So that values our investment at a multiple three and a half to four times of what we had bought it for. So our team has done a good job and I think that the overall collaboration between our automotive business, the casting business and our customers has worked very well and will give us plenty of growth going forward. The CV sector for Q4 India looks very strong and may continue into first half of next year.
Exports seem to have bottomed out and. We should see a gradual improvement from here on. Defense, we see a strong uptake driven by commencement of the ATAC order and the beginning of CQB production. We should look at 30, 40% plus growth in our defense business next year. Aerospace segment also we see a very strong growth next year also year after next because next year we have some new programs and some new capacities coming online, but significantly larger coming online year after next. And we believe that we are on track to really meaningfully grow this business in the next three odd years and make it a business that is sizable and will generate very tidy returns.
In addition to our top and bottom. Line. On the M and A side, you know we are looking at some very interesting opportunities and you know we’ll take it as it comes. In terms of capacity addition, we have new orders that we’ve won which are very long term in very strategic sectors and we are setting up some new facilities to take care of that. So I think on the whole that’s the picture where it stands. So I think we are now ready to take your questions. So thank you very much.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 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 comes from the line of Kunjan with Bank of America. Please go ahead.
Kunj Maheshwari
Hi, thanks for taking my question. My first question is on the defense business. There have been quite a wide ranging wins in the last quarter, right? Small guns, that car buying, then unmanned system system drones and then, you know, even the marine one came through in the last couple of months. So clearly the product capabilities and is far wider than the guns and the portfolio is expanding. Right. So I mean, I’m just looking to get some sense from you as to how do we think about the scale up of this business in the next two, three years? Of course there’s one way that we look at order book and execution of order book, but it does seem like, you know, some of the newer opportunities are adding in.
So, you know, some thoughts on how do we think about this business from a two, three years?
Amit Kalyani
Yeah, sure. Gunjan, I think you have to look at our defence business the way you look at our overall company. You know, we will de risk defense from any one vertical. We will have multiple verticals, we will have verticals that have continuous business, we’ll have verticals that will have lumpy business. And we will look at global opportunities for all the products that we make. It is very clear that unmanned systems and drones are a very big opportunity. These are definitely both complementary and supplementary to manned systems. So we have to have a play there. And we are there both in the water domain that is underwater and in aerial domain. And we are building the capability not. Just for the product, but also for the payload. So that is one way to look at it. And these are products that can be. Ranging from. Few crore rupees to many, many million dollars. So there’s a wide range of products within that also. So we believe that once you become a defense player, and especially in a network centric battle environment or defense environment, you need to have all the network products that become a force multiplier for any of your products.
Kunj Maheshwari
Got it. If I were to like this sort of thing, that defense is, you know, roughly about, you know, 10, 12% or even less 10% odd of your revenues right now with these new opportunities, order book conversion, I mean, you know, just directionally, how do you think this, how significant can this be? I’m just trying to get the scale of this business. Maybe Three years down the line, maybe five years down the line. What the way you internally sort of look at the evolution of this realistically.
Amit Kalyani
Defence has the opportunity to become as big as our business today is overall. Businesses today, if you look at global opportunities, you know, if you look at the budget of Europe, European defence budget Is going from 350 billion to India’s defence budget is growing by 21% this year. So overall, there is a huge growth taking place in these sectors. So it depends on what we play in what role we play and what we win. But clearly, 10%, 11% will definitely be more like closer to 18, 20% if things go right, could be even more than that.
Kunj Maheshwari
Got it. 18, 20% in two to three years. Is that how.
Amit Kalyani
Let’s look at 20, 30.
Kunj Maheshwari
Okay, got it. Now, second question is on this tariff. You know, clearly you guys navigated it really well with pretty modest hits. I’m just trying to get a color of what does the deal do beyond the easing of margin pressures, is there fundamentally something you see has shifted and which can put us in a better place as a supplier ecosystem from India? You know, some qualitative thoughts around that.
Aakash Javeri
Yeah. So look, obviously it puts us in a better position than certain other countries which have a higher tariff than us. So that’s one thing. Okay. Second is, you know, the tariff deal being done and the punitive 25% being removed means that we are in a differentiated position than others. Plus, the new product development will start again with all our customers. Not that it has stopped, but there is more confidence now to go full steam ahead.
Kunj Maheshwari
Got it. And last question, just on Europe restructuring again, trying to get your thoughts on. You mentioned that you will give an update by the end of the year, but any color on how. What is it that we are looking to do? Is it looking to wind down the business? Is it looking to shift it to India? I mean, what sort of research?
Amit Kalyani
I can’t say anything more than what we’ve already said.
Kunj Maheshwari
Okay, got it.
Amit Kalyani
You know, like I said, we have to make a profit or, you know, we have to take some decisions. We have to see what to do.
Kunj Maheshwari
Okay. All right, I’ll join back with you. Thank you so much.
operator
Thank you. Next question comes from the line of Amin Pirani with JP Morgan. Please go ahead.
Amin Pirani
Yes. Hi. Thanks for the opportunity. Actually, my first question was on the announcement of the investment in JS Auto. So my question was that, you know, given that you are probably the experts on the manufacturing business that it is, and given that, you know, balance sheet is not really a constraint for you. What is the value that, you know, you know, this investor is bringing in and how does this change the scale of operations which maybe you couldn’t have done on your own?
Amit Kalyani
So there’s nothing that we couldn’t have done on our own. I just think that sometimes having, you know, a few more, you know, let’s say a slightly different perspective is always good. And having more, you know, what do you call it, bandwidth to think about things. And they also have a lot of connect group globally. Plus we want this business to grow fast. We want it to grow both organically and inorganically. And now we don’t have to worry about putting any more money in here.
Amin Pirani
Okay, understood. Fair enough. Secondly, just following up on the Europe question. So interestingly in the last two, three quarters, it looks like the numbers have already started to move up. So, you know, this just trying to understand are there already some things that you’re doing in the business or. We still have to think about, you know, a kind of big restructuring which you had indicated like, you know, few quarters back.
Amit Kalyani
So look, we’re trying to do a lot of things, we’re reducing a lot of cost, but you know, it’s not easy. It’s every day there’s something new happening in Europe, you know, so we’re trying to do the best we can. We are putting a lot of improvement measures, etc. We just have to see how effective they are. Whether one is internal, the second is external. We also need to see whether whatever we are doing, the external landscape and the market is big enough and is there to take advantage of. It’s not just one way. Europe, I think is in a secular problem.
We don’t know where it’s heading. So we have to see.
Aakash Javeri
Thanks for that. I’ll come back.
operator
Thank you. Next question comes from the line of Kapil Singh with Nomura. Please go back.
Kapil Singh
Yeah. Good afternoon, sir. So wanted to check firstly your thoughts on the defense business profitability. Would it be comparable to the automobile business over time? How should we think about it?
Amit Kalyani
I would expect it to be, you know, profitable equivalent on an EBITDA basis, generally speaking. And you know, I think the ROCE should be better because we don’t have the same amount of capital employed.
Kapil Singh
Okay.
Amit Kalyani
Also it will have a long tail because there’ll be constant, you know, MRO and support income coming from everything that you sell.
Kapil Singh
Okay.
Aakash Javeri
And so this order book that we have, what period should we look at for the execution? Also we had a small arms contract order.
Amit Kalyani
Small arms is five years. The rest would be between mostly four years.
Kapil Singh
Okay. And sir, also on the outlook for particularly the global truck business, has it already bottomed out as you, as you mentioned. But when do we start to see the upcycle? Are there any signs visible? What is the outlook for next one year? You know, not just asking for one. Quarter.
Amit Kalyani
Colleagues to both answer that question.
Kedar Dixit
Well, you’ve seen the incoming orders in the US for you know, class 7, 8 in the last two months. They’ve been on the upside and generally there is a sense of confidence just given that all the uncertainties of the last year that things would be better. So we are hoping that things would be better than last year and hopefully things would be stable as well and growing. So that’s, that’s what we are planning for. It’s going to be steady but on the positive side is what we expect.
Aakash Javeri
And sir, can you comment on the passenger vehicle exports as well?
Kedar Dixit
So we continue growing our passenger car exports. Again we are engaged with all the major players in the world and yeah, I mean we have a lot of opportunities on the table. So all of them are being addressed.
Kapil Singh
Okay, thank you. Thanks a lot.
operator
Thank you. Next question comes from the line of Abhishek Shah with Valcor Capital. Please go ahead. Hello Mr. Shah, sorry for interrupting, your voice is breaking. Can you come in the range and talk?
Abhishek Shah
Yeah, hi. Is it better now? Hello.
Amit Kalyani
Yes, please go ahead.
Abhishek Shah
Yeah. Sir, this is regarding a news article and somewhere we’ve been reading online that Kalyani Group as such has been granted by Orissa government. We were planning to set up a project of 17,000 odd crores. Just wanted some more clarity on this. I mean the project, what our understanding was it will be implemented by three companies of our group. Bharat Forge, Kalyani Steel and Sarnoha. So maybe if you can give us some more understanding on what will be the split, who’s spending how much and what is this project about and maybe tentative timelines for the same.
Amit Kalyani
So the first part of the project will be a specialty steel plant which will be set up by Kalyani Steels. That will be coming up in, I mean once the EC and everything happens they will break ground and start work. That will be about 700,000 tons of steel, specialty steel. Then the second part will be a super alloy plant which will be set up by Saag Loha to make aerospace and other superalloy grades including tool and die steel, etc. And the third will be a forging, machining, potentially also casting facility by the relevant Companies including JSA if needed.
Aakash Javeri
If. There is an opportunity to do further expansion of our own existing products and certain new products using the raw material and the overall advantage that we get in that location.
Abhishek Shah
So what will be the tentative capex split between the three?
Amit Kalyani
I see Each company will do its own capex. So I don’t want to in a Bharat first call talk about other companies.
Abhishek Shah
No, no. In the sense out of 17,000, how much are we going to spend? How much is Bharat for? Going to spend, sir?
Amit Kalyani
Bharat for. We have said up to 3000 crores.
Abhishek Shah
Okay, got it. And the tentative timelines for when we start our capex. I mean, I’m talking from Bharat for his perspective. And how does it link to the group?
Amit Kalyani
Basically this will be the next growth phase after our existing expansions in Baramati, etc.
Abhishek Shah
So nothing in the immediate one or two years.
Amit Kalyani
I mean, not in the next one year.
Abhishek Shah
Okay, got it. Got it together. That’s all from my side. Thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask questions. Next question comes on the line of Nitin Jain with Fair Value Equity Advice.
Nitin Jain
Yeah, congratulations on the excellent quarter. I have just two questions if you can talk a little bit about your defense order pipeline. Now I’m asking this because QOQ itself, our order book has grown more than 6, 1500 crores. So where do we expect to end this year and what kind of bid pipeline we have for fiscal 2027?
Amit Kalyani
So we have increased our order book by two things. One is the CQB carbide and some of the EP orders that we got. Okay. Now we have a lot of other things that are in the pipeline. There are a lot of new programs that we are working on, lot of new products that we are developing. I don’t want to talk about any of that right now. Once we place, you know, once we make the bids, we can talk about them.
Nitin Jain
So do we expect any of these to materialize by fiscal 27 or. There’s still time to go.
Amit Kalyani
See, as you know, the whole defense procurement process is being overhauled and being speeded up. The new DAP has come out, which is very, you know, comforting that it is focusing more on Indian development and design products and make in India a lot more. So I think we are quite bullish on this whole sector growing for India. There’s also a global opportunity to be a supplier both of systems and components into Europe and many other parts of the world. So overall, I think this is A market that’s going to grow. This is a sector that’s going to grow and a business that is going to have a long term strong future for us.
Nitin Jain
Also recently one of the Indian coaching companies, they were inducted into the NATO supply chain for high precision defense components. So like this is considered positive for their business. I just wanted to know if we also share any similar credentials or we are vying for the same.
Amit Kalyani
First of all I would say please validate what you are saying because. Okay. And second, we already are supplying into. We are already exporting into sells, you know, large quantities in this area.
Nitin Jain
Great. And lastly, any development on the server business? Last we had heard from the company was that it tied up with a few global leaders. If you can make a progress. Okay, thank you.
Nitin Jain
Thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Akesh Chiveri. With time and tight advisors, please go.
Aakash Javeri
Good afternoon sir and thank you for the opportunity. My first question is how has the acquisition of American Axle been performing and what is our view on the segment?
Amit Kalyani
The acquisition has performed well. Our margins have grown by almost 200 basis points and I expect that this sector will do well. This is a high growth sector and we are already winning quite a lot of new business from Indian OEMs. So this is been a good acquisition for us and we expect this to turn out to be a very positive step for the company.
Aakash Javeri
Sure. And the group also has taken Automotive Access. So how are we looking at these two companies in similar.
Amit Kalyani
So I’m not personally involved with Automotive Axles individually because of the same reasons. As you know, Automotive Axles is a investment of the company of the group for a very long time. It has its own position in the heavy axle sector and this is another player in this axle sector. So I think each will find its own niche and you know, where needed they will also compete.
Aakash Javeri
Sure. And my last question is has American Accent been gaining market share?
Amit Kalyani
Has been what has been gaming market share. Yes. It’s been getting a lot of new business. Yes.
Aakash Javeri
Okay. Any way to quantify that?
Amit Kalyani
I think you know, next quarter we’ll talk about that.
Aakash Javeri
Sure. Thank you so much.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Once again, a reminder to all the participants that you may press Star and one to ask a question. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I would now like to hand the conference over to Mr. Amit Kalyani for closing comments.
Amit Kalyani
So, ladies and gentlemen, thank you very much for your time and interest and your questions. You know, as always, it’s a pleasure interacting with you. Thank you for your positive question, comments and feedback. And we look forward to remaining engaged as we continue the growth journey of our company over the next many years. Thank you. Bye.
operator
Bye. Thank you on behalf of Bharat Forge Limited. That concludes this conference. Thank you for joining us. You may now disconnect your lines.