Archive · 12 Nov 2025
Bharat Forge Reports Mixed Q2 FY26 Results Amidst Export Challenges
Bharat Forge, a company that makes metal parts for vehicles and defense equipment, announced its financial results for the second quarter of the fiscal year 2026.
Their sales revenue dropped by 20% compared to last year because they sold fewer parts overseas.
This was mainly due to trade issues with the United States and fewer orders for big trucks.
However, the company managed to make more profit on each sale.
This happened because they improved their product mix, meaning they sold more profitable items, and controlled their costs.
They also received new defense orders worth 2.5 billion rupees, which helps balance out the lower sales from exports.
While things are tough in the export market right now, some experts think the situation might start getting better by the second half of next year.
They also mentioned that a big order for Indian guns will take longer to complete, spread over three years instead of two.
Bharat Forge reported a 20% year-on-year drop in standalone Q2 FY26 revenue, primarily due to weak exports, US tariffs, and commercial vehicle destocking.
Despite revenue challenges, the standalone EBITDA margin improved to 28.3% driven by a better product mix, cost management, and strong performance in the passenger vehicle and industrial segments.
The company secured new defense orders valued at Rs 2.5 billion, providing a partial offset to the weakness in export markets.
Export market conditions remain challenging with impacts from US tariffs and macroeconomic factors, though some analysts anticipate a bottoming out and potential recovery by late FY27.
The execution timeline for a significant Indian guns order has been extended to three years, impacting near-term revenue recognition.
- Who
- Bharat Forge (BHFC) and financial analysts (CLSA, Jefferies, Nomura, INCRED)
- What
- Reported mixed Q2 FY26 financial results, characterized by a significant year-on-year revenue decline but an improvement in EBITDA margins, alongside new defense order wins.
- When
- The results for the quarter ending September 30, 2025, were announced on November 12, 2025.
- Where
- The company's performance is influenced by its operations in India and its export markets, particularly North America.
- Why
- Revenue decrease is attributed to weak exports, US tariffs, and commercial vehicle destocking, while margin improvement is due to better product mix, cost management, and performance in passenger vehicle and industrial segments.
Concerns on Export Markets and US Tariffs
Positive Outlook on Defense and Improving Margins
Export Performance and Outlook
Concerns on Export Markets and US Tariffs
Bharat Forge's Q2 standalone revenue declined 20% year-on-year due to weak exports, significantly impacted by US tariffs and commercial vehicle (CV) destocking. Management anticipates challenging demand in North America for the latter half of FY26.
Positive Outlook on Defense and Improving Margins
Analysts believe the cyclical downturn in export markets is nearing its bottom, with a potential recovery expected by the second half of FY27. A possible India-US trade deal could alleviate the impact of tariffs.
Order Execution Timeline
Concerns on Export Markets and US Tariffs
The execution timeline for a significant Indian guns order has been extended to three years from the previously expected two years, potentially affecting near-term revenue recognition.
Positive Outlook on Defense and Improving Margins
Bharat Forge secured new defense orders totaling Rs 2.5 billion, which is viewed as a positive development that helps offset weakness in other export segments.
Profitability vs. Revenue
Concerns on Export Markets and US Tariffs
While overall EBITDA fell 12% year-on-year due to weak US commercial vehicle business, the standalone EBITDA margin improved to a healthy 28.3%, driven by a better product mix and cost management, as well as contributions from the passenger vehicle and industrial segments.
Positive Outlook on Defense and Improving Margins
Despite revenue falling below estimates, EBITDA performance exceeded expectations for some analysts due to improved product mix and cost control. Foreign subsidiary margins also showed year-on-year improvement.
- Company
- Bharat Forge (BHFC)
- Reporting Period
- Q2 FY26 (Results announced November 12, 2025)
- Standalone Revenue
- Below estimates, down 20% year-on-year (YoY)
- Standalone EBITDA Margin
- 28.3%, higher than estimates and up QoQ
- Foreign Subsidiary Margin
- 3.8%, up 240bps YoY
- New Defense Orders Secured
- Rs 2.5 billion
- Large Indian Guns Order Execution
- Extended to 3 years from 2 years
- Analyst Target Prices (Examples)
- CLSA: Rs 1180, Jefferies: Rs 1050, Nomura: Rs 1553, INCRED: Rs 1209
Sources
Q2 Results 12th Nov Live: HAL, Asian Paints, Tata Steel, Ashok Leyland, Prestige, Honasa, Nazara, IRCTC, Cochin Shipyard, Deepak Nitrite, Gabriel India to announce Q2 results, Bajaj Finserv, Bosch, BS
3 ‘Buy’ recommendations by Jefferies with up to 31% upside potential
Hindustan Aeronautics posts 11% rise in quarterly profit on robust order execution