Bharat Forge is preparing for a tough year. What went wrong?

What do tanks, Teslas, and turbines have in common? Bharat Forge. But Q1 had other plans.

For most people, the name Bharat Forge doesn’t ring a bell. But step inside a truck engine, an artillery gun, a rail axle, or even a Tesla, and there’s a good chance you’ll find a part forged by them.

Over the years, the Pune-based company has quietly built itself into a global manufacturing powerhouse. It started out with auto parts, then moved into defence systems, aerospace, renewable energy, railways, and more. It’s one of those rare Indian companies that can say it makes in India and ships to the world.

But even the most well-oiled machines can stall when the terrain shifts. And this quarter, Bharat Forge found itself navigating a few sharp turns.

Exports took a hit. Margins softened. And a few sudden policy changes overseas disrupted demand in ways that no spreadsheet could have predicted.

Let’s start with the US. The country had earlier proposed tougher emission rules for heavy-duty trucks through the Environmental Protection Agency. The idea was to cut pollution, but for Bharat Forge, it meant something else, a fresh demand wave. New rules usually mean vehicle upgrades, which means more orders. But just as the industry was gearing up, the regulation was rolled back. That wiped out a big chunk of expected orders.

To make things worse, the US also introduced fresh tariffs. That added a layer of uncertainty for exporters like Bharat Forge. The impact showed up in the numbers, with North America pulling back on orders and total exports dipping sharply.

Europe wasn’t immune either. There was a slight recovery in commercial vehicles, but demand for industrial and aerospace products remained muted. The usual summer slowdown didn’t help.

Put all that together, and Bharat Forge’s export revenue fell by nearly 13 percent compared to the March quarter. Standalone revenue dropped to ₹2,105 crore, a 2.7 percent decline. Margins also slipped a bit. The company still held a solid EBITDA margin of 27.9 percent, but that was lower than the 29.1 percent it had just three months ago. Net profit came in at ₹338 crore.

So yes, the quarter looked a little grey.

But that’s not the full picture.

If you look at the consolidated performance, the story gets more interesting. Bharat Forge’s total revenue, including its subsidiaries abroad, actually rose slightly to ₹3,909 crore. That’s because its international operations, especially in aluminium forging, have started to show signs of improvement. These units, which had been dragging performance in earlier quarters, have now begun generating cash profit. Losses in its electric mobility business also narrowed.

And that matters. Because Bharat Forge is betting big on the future of mobility.

Then there’s defence, one of the company’s most ambitious long-term bets. This quarter alone, Bharat Forge secured new defence orders worth ₹847 crore. Of that, ₹269 crore came from strategic projects. The total defence order book now stands at ₹9,463 crore.

The only catch? Defence contracts usually take time to execute and longer to bill. So while the order inflow looks impressive, the revenue impact will show up gradually over the coming quarters and years.

Back in India, the auto business had a mixed run. Passenger vehicle components saw strong demand, helped by new client wins and volume growth from key customers. But the commercial vehicle segment saw its usual seasonal weakness. The industrial business posted a small uptick, driven by some one-time machine tool orders and a bit of momentum in defence.

Behind the scenes, the company has also been making some strategic moves. It completed the acquisition of AAM India, a local axle manufacturer, using money raised through a ₹1,650 crore QIP last year. It also moved its defence business into a wholly owned subsidiary, Kalyani Strategic Systems Ltd. These changes might not grab headlines, but they help streamline operations and position the company better for growth in specific verticals.

Despite these forward-looking moves, management isn’t shying away from reality. They’ve acknowledged that FY26 won’t be a smooth ride. Global demand remains patchy, policy shifts are unpredictable, and cost pressures aren’t going away.

That’s why the company is going back to basics. Focus more on what’s working, like defence and domestic auto; and tighten costs wherever possible.

But Bharat Forge isn’t just reacting. It’s adapting.

This isn’t just a quarterly blip. It’s a company in the middle of a transition from being a high-quality supplier to becoming a multi-pronged industrial platform. It’s investing in EVs, aluminium, aerospace, and clean energy. Some of these bets are already showing progress, while others will take time.

There are still challenges. Defence revenues can be lumpy. The EV vertical is not yet profitable. Export demand could remain soft for another few quarters. But this is a company that’s used to playing the long game.

It shows up in the numbers. Return on capital employed held steady at 15.6 percent. The debt-equity ratio remained low at 0.33. And despite the headwinds, the company continues to generate cash.

So what should you keep an eye on next?

For starters, whether the EV vertical can trim its losses further. Also, how quickly those massive defence orders start reflecting in revenue. And of course, whether export momentum can recover once the global environment stabilises. Aluminium operations could also offer margin gains if volumes hold up.

This wasn’t a breakout quarter. But it wasn’t a breakdown either.

It was Bharat Forge doing what it does best, adapting to a bumpy road with quiet resilience.

And if there’s one thing we know about Bharat Forge, it’s this: when the world gets complicated, they don’t pause. They build.

FAQs

What does Bharat Forge manufacture?

Bharat Forge makes a wide range of products including automotive components, defence systems, aerospace parts, rail axles, industrial machinery, aluminium forgings, and even components for electric vehicles. Its products are used in trucks, artillery guns, aircraft, railways, and passenger cars, including some Tesla models.

Why did Bharat Forge’s Q1 FY26 performance decline?

Bharat Forge’s Q1 FY26 results were impacted by a drop in exports, softer margins, and policy changes in key markets like the US. The rollback of emission regulations for heavy-duty trucks and new US tariffs disrupted demand, leading to lower orders from North America.

How did policy changes in the US affect Bharat Forge?

The US initially planned tougher emission rules for heavy-duty trucks, which was expected to boost orders. However, when the policy was rolled back, anticipated demand vanished. Additional US tariffs added further uncertainty for Bharat Forge’s export business.

What was Bharat Forge’s revenue and profit in Q1 FY26?

In Q1 FY26, Bharat Forge reported standalone revenue of ₹2,105 crore and a net profit of ₹338 crore. Consolidated revenue, including overseas subsidiaries, stood at ₹3,909 crore, showing slight growth due to improvements in international operations.

How is Bharat Forge’s defence business performing?

Bharat Forge secured ₹847 crore in new defence orders during Q1 FY26, with ₹269 crore coming from strategic projects. Its total defence order book now stands at ₹9,463 crore, although revenue recognition from these contracts will take time.

What is Bharat Forge’s strategy in electric mobility?

Bharat Forge is investing heavily in electric mobility through its EV vertical. While this business is still loss-making, losses have narrowed in Q1 FY26, and the company is focusing on scaling aluminium forgings and lightweight components for EVs.

How did Bharat Forge’s overseas business perform in Q1 FY26?

International operations, especially aluminium forging units, showed improvement and turned cash profitable. This helped offset some of the weakness in exports, particularly from the US and Europe.

What are the key challenges Bharat Forge faces right now?

Major challenges include soft global demand, unpredictable policy changes, cost pressures, seasonal weakness in commercial vehicles, and slow revenue conversion from defence orders. The EV vertical is still in the investment phase and not yet profitable.

What is Bharat Forge’s financial position in Q1 FY26?

Bharat Forge maintained a healthy balance sheet with a return on capital employed (ROCE) of 15.6 percent, a low debt-equity ratio of 0.33, and continued strong cash generation despite global headwinds.

What should investors watch for in Bharat Forge’s future performance?

Investors should track the pace of defence order execution, recovery in export demand, margin gains from aluminium operations, and further loss reduction in the EV vertical. These factors will influence growth in the coming quarters.