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.

Bharat Forge Limited's wholly-owned subsidiary, Kalyani Strategic Systems Limited (KSSL), has secured contracts worth over ₹2,500 million from the Indian Ministry of Defence for underwater systems. The contracts, signed on November 10, 2025, stipulate delivery within a year, aligning with Fast Track procurement norms.

Contract Details

Strategic Importance

This development marks a significant milestone for KSSL in the underwater domain, which the company has identified as a key focus area alongside naval guns and marine equipment. The contracts underscore KSSL's growing capabilities in design, development, and production of unmanned marine systems.

Company Background

KSSL, established as the flagship defense business entity of the Bharat Forge Group, has been building its 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.

Alignment with Indian Navy's Requirements

The contracts demonstrate KSSL's commitment to aligning its capabilities with the Indian Navy's urgent and mission-critical requirements. This alignment is crucial for enhancing India's naval defense capabilities.

Bharat Forge's Q2 FY26 Performance Context

While this contract win is a positive development for KSSL, it's worth noting the broader context of Bharat Forge's recent financial performance:

The defence business, including KSSL's operations, continues to be a growing segment for Bharat Forge, with these new contracts likely to contribute positively to future financial results.

Future Outlook

KSSL's success in securing these contracts may pave the way for further growth in the defense sector. The company remains committed to timely delivery of these advanced underwater systems, potentially strengthening its position in the naval defense market.

As KSSL continues to expand its capabilities and secure significant contracts, it is poised to play an increasingly important role in India's defense manufacturing ecosystem, aligning with the country's push for self-reliance in defense production.