Bharat Forge , a leading Indian forging company, has reported a decrease in exports to North America due to challenging demand conditions expected in the second half of fiscal year 2026. Despite this setback, the company remains optimistic about its overall growth prospects.

Declining US Exports

Bharat Forge is experiencing a significant decline in its exports to the North American market, particularly in the commercial vehicle (CV) segment. This downturn is attributed to a combination of factors, including slow freight growth, weak sentiment, and tariff uncertainty weighing on CV demand in North America.

Compensatory Growth Areas

To offset the decline in US exports, Bharat Forge is focusing on three key areas for growth:

1. India's Industrial Business: The company anticipates robust growth in its domestic industrial operations, which include sectors such as construction, mining, and power generation.

2. Non-US Exports: Bharat Forge is actively diversifying its export markets beyond North America to mitigate the impact of the US slowdown.

3. Defence Sector: The company's defence business is expected to play a crucial role in compensating for the decline in US exports. As of the first half of FY26, Bharat Forge's defence order book stood at Rs 9,467.00 crores, indicating strong potential in this sector.

Strategic Moves

Bharat Forge has taken several strategic steps to adapt to the changing market conditions:

1. Defence Business Restructuring: The company has transferred all defence-dedicated assets to its wholly-owned subsidiary, Kalyani Strategic Systems Limited (KSSL). This move is expected to streamline operations and enhance focus on defence-related opportunities.

2. Diversification: The company is actively pursuing opportunities in aerospace, castings, and aggregates across various markets to reduce dependence on any single sector or region.

3. European Operations Review: Bharat Forge is currently reviewing its European steel manufacturing footprint and expects to implement concrete measures by the end of the fiscal year to improve efficiency and profitability.

Outlook

While the challenging demand conditions in North America are expected to persist in the near term, Bharat Forge remains confident in its ability to navigate these headwinds. The company's focus on diversification, coupled with the anticipated growth in its Indian operations and defence business, is expected to help maintain a balanced growth trajectory.

As Bharat Forge continues to adapt to the evolving global market conditions, investors and industry observers will be closely watching how effectively the company can execute its strategy to offset the decline in US exports and capitalize on emerging opportunities in other sectors and regions.

Bharat Forge , a leading Indian multinational corporation in the auto component manufacturing sector, reported a decline in revenue for the second quarter, while also announcing plans for significant fundraising.

Q2 Financial Highlights

Revenue Decline and Margin Improvement

Bharat Forge experienced a year-over-year revenue decline of 13.3% in Q2, with total revenue falling to Rs 19.5 billion from Rs 22.5 billion in the same quarter last year. This figure fell short of market estimates, which had projected revenue of Rs 22.46 billion.

Despite the revenue dip, the company managed to improve its EBITDA margin, which rose to 28.30% from 27.84% in the previous year. This margin improvement exceeded market expectations of 25%, indicating the company's ability to maintain operational efficiency in challenging market conditions.

Profitability

The company's EBITDA for Q2 stood at Rs 5.5 billion, down from Rs 6.25 billion in the previous year but surpassing analyst estimates of Rs 5.23 billion. Net profit for the quarter was Rs 3.1 billion, showing a decrease from Rs 3.6 billion year-over-year but slightly outperforming market expectations of Rs 3.04 billion.

Fundraising Approval

In a significant development, Bharat Forge's board has approved raising funds up to Rs 20 billion. This decision, disclosed in the company's regulatory filing, suggests that Bharat Forge may be preparing for potential expansion or strategic investments. The specific use of these funds was not detailed in the announcement.

Looking Ahead

The approval for substantial fundraising of up to Rs 20 billion indicates that Bharat Forge may be positioning itself for future growth opportunities or preparing to navigate ongoing market challenges. Investors and analysts will likely be keen to understand the company's plans for utilizing these funds and its strategy for addressing the revenue decline in upcoming quarters.

As Bharat Forge navigates through a period of revenue challenges, its ability to maintain profitability and secure approval for significant fundraising demonstrates the company's resilience in the competitive auto component sector.