Bharat Forge , a leading Indian multinational company, reported a challenging second quarter for the fiscal year 2026, with standalone revenues declining amidst significant market pressures. The company's financial performance reflects the ongoing volatility in the global automotive sector, particularly in North America.

Revenue and Market Challenges

Bharat Forge experienced a 7.5% sequential drop in standalone revenues, which stood at INR 1,947 crores for Q2 FY26. This decline was primarily attributed to two key factors:

1. Rapid degrowth in the North American Commercial Vehicle (CV) market
2. Inventory destocking across segments

The impact of these challenges is starkly evident in the company's export figures to North America:

Resilience in Profitability

Despite the revenue setback, Bharat Forge demonstrated resilience in maintaining its profitability:

• EBITDA Margin: 28%

The company's ability to sustain its EBITDA margin in the face of significant market headwinds underscores its operational efficiency and cost management capabilities.

New Business Acquisitions

In a positive development, Bharat Forge secured new business worth INR 1,582 crores across various segments. This achievement highlights the company's continued focus on diversification and growth, even in challenging market conditions.

Future Outlook and Strategic Initiatives

Looking ahead, Bharat Forge has outlined several strategic moves:

1. Q3 FY26 Expectations: The company anticipates a performance similar to Q2 in the upcoming quarter.
2. Potential Recovery: Signs of improvement are expected in Q4 of FY26.
3. Capital Raising Plans: Bharat Forge has announced intentions to raise up to INR 2,000 crores. This capital is earmarked for:
   • Organic growth initiatives in India
   • Potential inorganic growth opportunities

Conclusion

Bharat Forge's Q2 FY26 results reflect the company's resilience in the face of significant market challenges, particularly in the North American CV sector. While revenues have taken a hit, the maintenance of healthy EBITDA margins and substantial new business acquisitions indicate the company's underlying strength. The announced capital raising plans suggest a forward-looking approach, positioning Bharat Forge for potential growth opportunities as market conditions evolve.

Investors and industry observers will likely keep a close watch on Bharat Forge's performance in the coming quarters, particularly for signs of the anticipated recovery in Q4 FY26 and the impact of its strategic initiatives.

Bharat Forge , a leading Indian auto components manufacturer, has reported mixed financial results for the second quarter of fiscal year 2026, while also securing a significant defence contract through its subsidiary.

Q2 FY2026 Financial Performance

Bharat Forge reported standalone net sales of Rs 19.50 billion for Q2 FY2026, marking a decline of 13.00% year-over-year and 7.50% quarter-over-quarter. The company's total tonnage reached approximately 56.50kt, down 12.00% year-over-year and 9.00% quarter-over-quarter. Despite the revenue decline, Bharat Forge managed to improve its standalone EBITDA margin to 28.30%, gaining 50 basis points year-over-year and 110 basis points quarter-over-quarter.

The company's performance exceeded brokerage estimates in terms of profitability, with the EBITDA margin surpassing expectations by 200 basis points. This improvement was attributed to a favorable product mix from value-added business and effective cost management strategies.

Defence Sector Developments

In a significant development for its defence business, Kalyani Strategic Systems Ltd (KSSL), a wholly-owned subsidiary of Bharat Forge, has secured contracts valued at over Rs 2,500.00 million from the Indian Ministry of Defence. The contracts, signed on November 10, 2025, are for the supply of underwater systems and stipulate delivery within a year, aligning with Fast Track procurement norms.

KSSL has been focusing on building capabilities in unmanned marine systems over the past five years. The company has already supplied autonomous underwater vehicles that are currently in service with the Indian Navy. This new contract further solidifies KSSL's position in the underwater domain, which is a key focus area for the company along with naval guns and marine equipment.

Analyst Outlook

Following the Q2 results and the defence contract announcement, ICICI Securities has raised its target price for Bharat Forge. The brokerage firm cited strong growth in the defence segment and an improved overall business outlook as reasons for the upgrade.

Company Statement

Regarding the defence contracts, a company spokesperson stated, "We remain committed to ensuring timely delivery of these advanced solutions. The underwater domain is a key focus area for KSSL, and we are ramping up our capabilities to be closely aligned with the Indian Navy's urgent and mission-critical requirements."

Bharat Forge's mixed Q2 results, coupled with the significant defence contract, highlight the company's efforts to diversify its business and capitalize on opportunities in the growing defence sector. As the company continues to navigate challenges in its core automotive components business, the expansion into defence could provide a new avenue for growth and stability.