Bharat Forge shares dropped 3% on Thursday to trade at ₹1,773.70 in Mumbai. Traders punished the forging giant after second-quarter earnings missed market consensus, weighed down by operational drag across foreign subsidiaries and sharp margin erosion in its defence arm. Net profit contracted 7% year-on-year to ₹278.6 crore for the quarter ended September 30, down from ₹299 crore a year earlier. Analyst forecasts had pegged profit closer to ₹342 crore. The miss was decisive.
Yet topline momentum showed surprising resilience. Consolidated revenue jumped 21% year-on-year to ₹4,870 crore, comfortably clearing consensus estimates of ₹4,765 crore. Consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA) climbed to ₹768 crore from ₹726 crore a year ago, though it fell short of the ₹794 crore targeted by the street. Consolidated EBITDA margin came in at 18.8%—an 80-basis-point expansion from the previous year that beat market estimates of 16.7%.
| Metric (Consolidated Q2) | Reported (₹ Cr / %) | Year-Ago (₹ Cr / %) | Consensus Estimate | YoY Change |
|---|---|---|---|---|
| Revenue | ₹4,870 cr | ₹4,025 cr | ₹4,765 cr | +21.0% |
| EBITDA | ₹768 cr | ₹726 cr | ₹794 cr | +5.8% |
| EBITDA Margin | 18.8% | 18.0% | 16.7% | +80 bps |
| Net Profit | ₹278.6 cr | ₹299.0 cr | ₹342 cr | -6.8% |
But operating numbers below the headline masked structural friction. Bharat Forge announced a formal strategic review of its international businesses, where output and returns remain well below internal targets. Operations in the United States and other foreign outposts faced persistent margin compression, with select overseas units slipping into outright negative margins.
Domestic segments saw localized margin pressure as well. Standalone operating margins trimmed slightly to 25.9% from 26.2%. The sharper blow came from Kalyani Strategic Systems Ltd., the group's flagship defence entity, where EBITDA margins tumbled to 10.7% from 17.2% a year ago—a steep 650-basis-point retrenchment that triggered swift selling on institutional desks.
Despite the offshore drag, management held the line on its domestic manufacturing trajectory. The company reaffirmed its guidance of 20% to 25% revenue growth for the Indian manufacturing division in FY27.
A substantial portion of that expansion relies on long-cycle defence orders. Commercial manufacturing of the Advanced Towed Artillery Gun System (ATAGS) is slated to begin in FY27, with formal revenue recognition starting from the beginning of FY28.
Thursday’s drop clipped immediate momentum, but long-term positioning remains positive. Even after the post-earnings pullback, Bharat Forge shares hold a year-to-date gain of over 20%. Market attention now pivots to the execution of the overseas restructuring, with investors watching whether non-core foreign asset rationalisation can stabilize group margins ahead of the FY27 domestic scale-up.