Demand woes lead to valuation downgrades for Bharat Forge

Bharat Forge's (BHFC's) adjusted consolidated operating profit for the third quarter of financial year 2025 (Q3FY25) came in well below consensus estimates, due to weaker revenue in India and overseas subsidiaries.

- DEVANGSHU DATTA

The near term looks uncertain, due to weakness in export markets, and demand moderation in the domestic automobile industry and delays in defence execution. BHFC's Q3FY25 standalone revenue dropped 7 per cent Y-o-Y at ₹2,100 crore, while operating profit dropped 5.5 per cent (unadjusted) at ₹610 crore, and adjusted net profit declined 5 per cent Y-o-Y at ₹350 crore.

In the first nine months of financial year 2025 (9MFY25), revenue grew 1 per cent to ₹6,680 crore and operating profit was up 4 per cent to ₹1,890 crore and adjusted net profit grew 4 per cent Y-o-Y to ₹1,070 crore.

Bharat Forge's reported Q3FY25 standalone operating profit of ₹610 crore (including forex gain) is well below estimates. Standalone revenues declined 7 per cent Y-o-Y due to 10 per cent Y-o-Y decline in domestic business with declines across all segments except passenger vehicles and 5 per cent Y-o-Y decline in export revenues with weakness across all segments barring in the US.

The adjusted standalone operating profit margin (excluding forex gains) was 28.1 per cent (down 70 bps Q-o-Q).

The adjusted standalone net profit came in at ₹350 crore.