Bharat Forge, a leading auto-to-defence equipment manufacturer, has reported a mixed bag of results for the fourth quarter of FY25, with profits rising despite a decline in revenue. The company announced on May 8, 2025, that its profit after tax (PAT) fell by 12% year-on-year to ₹345 crore, down from ₹390 crore in the same quarter last year. This decline comes amid a backdrop of decreasing revenue from operations, which declined by 7.1% to ₹2,163 crore compared to ₹2,329 crore in Q4 FY24.
In a regulatory filing, Bharat Forge attributed the revenue drop to various market factors, including the ongoing volatility in the export sector. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter were reported at ₹616.7 crore, marking a 7% decline from ₹659 crore in the previous year. Despite these challenges, the EBITDA margin saw a slight increase to 28.5% from 28.3% year-on-year.
Following the earnings announcement, shares of Bharat Forge experienced a downturn, falling 3.41% on the National Stock Exchange (NSE) to ₹1,102 apiece. Investors reacted to the mixed results, weighing the rising margins against the falling sales figures.
Bharat Forge also revealed that it secured new orders worth ₹4,343 crore during the quarter, which included ₹3,417 crore towards the Advanced Towed Artillery Gun System (ATAGS) program. The company’s defence order book stood at ₹9,420 crore as of March 2025, reflecting a strong demand for defence-related contracts, which accounted for 70% of the total new orders secured in FY25.
Despite the positive performance in securing new orders, Bharat Forge refrained from providing an outlook for the export business for FY26 due to ongoing uncertainties related to tariffs and market conditions. B.N. Kalyani, Chairman and Managing Director of Bharat Forge, emphasized the company's focus on improving consolidated profitability through various internal strategies. These include reducing losses in the E-Mobility vertical, enhancing operational efficiency in the aluminium business, and leveraging manufacturing capabilities in North America.
In addition to these challenges, Bharat Forge's ferrous castings business showed remarkable growth, with revenues increasing by 23%, EBITDA growing by 35%, and profits doubling compared to FY24. The company reported that key return ratios for this division exceeded 20%, indicating strong operational performance.
Looking ahead, Bharat Forge aims to consolidate its gains in the passenger vehicle (PV) business, which has shown impressive year-on-year performance driven by new business acquisitions. The company expects to grow in line with the overall industry average, despite the headwinds faced in other segments.
On the export front, Bharat Forge witnessed a sequential recovery in Q4 FY25, although year-on-year figures remained slightly lower. Total export revenue on a standalone basis rose to ₹1,232.10 crore in Q4 FY25 from ₹1,151 crore in Q3, but still lagged behind the ₹1,248.8 crore reported in Q4 FY24. The Americas continued to be the most resilient export market for Bharat Forge, contributing ₹816.1 crore in Q4, supported by steady demand.
In contrast, the company’s defence segment revenue experienced a significant decline, halving compared to the previous year. This drop has raised concerns among investors about the sustainability of growth in this critical area.
The board of Bharat Forge has recommended a final dividend of ₹6 per equity share with a face value of ₹2 each for the financial year ended March 31, 2025, subject to approval at the upcoming Annual General Meeting. If approved, the dividend will be paid on or after August 12, 2025.
As Bharat Forge navigates these challenges and opportunities, the focus remains on leveraging its strong order book and enhancing profitability. The integration of the AAM India business is also set to occur in FY26, which the company believes will further bolster its product portfolio and market presence.
In summary, Bharat Forge's latest earnings report highlights the complexities of operating in a fluctuating market. While the company has secured significant new orders and demonstrated resilience in certain sectors, the decline in revenue and profit margins raises questions about future growth prospects. Investors will be closely monitoring the company's strategies and performance as it adapts to changing market conditions.
