Bharat Forge Ltd BHARATFORG

Summary

Bharat Forge is India's largest forgings exporter, and its aerospace business is real: a first-ever Indian supplier relationship with Embraer for landing-gear forgings, an extended Rolls-Royce Pearl 10X engine-blade partnership, and new FY26 wins with Pratt & Whitney Canada and Liebherr Aerospace. That business, however, generated just ₹255 crore of FY26 revenue — about 1.5% of ₹16,812 crore consolidated revenue — and is not even a separately reported financial segment; it sits folded into "industrial exports" alongside other businesses.

FY26 was, by the company's own account, a weak year for the core automotive franchise: North American Class-8 commercial-vehicle exports fell 50% year-on-year on cyclical destocking, and standalone revenue fell 5.1%, with standalone PAT down 38% on a large exceptional charge. Aerospace and the separate Defence business (via Kalyani Strategic Systems) were explicitly framed by management as offsetting this softness — a real, if currently small, diversification benefit.

None of that resolves the valuation problem: at a trailing P/E of roughly 92x — more than double the company's own historical range in normal cycles — this stock already prices in a great deal of future aerospace-and-defence success on top of an automotive recovery that has not yet arrived. This research could not locate any named sell-side analyst coverage to cross-check that multiple against.

Net: SELL. The forgings franchise and its aerospace foothold are both genuine; the price already assumes a materially better future than the FY26 numbers, on their own, support.

• First Indian supplier to Embraer. A long-term landing-gear-forgings contract, described by the Chairman as making Bharat Forge "the first supplier-partner to Embraer from India."
• An extended, named Rolls-Royce relationship. Engine-blade supply for the Pearl 10X programme.
• Two new FY26 customer wins — Pratt & Whitney Canada and Liebherr Aerospace — expanding the customer roster beyond the historical base.
• Dedicated new capacity coming online. A landing-gear machining facility inaugurated in Pune during FY26, with a ring mill at Baramati expected H1 CY2027 and new aerospace forging capacity targeted for FY2028.
• A genuinely strong balance sheet and credit profile (AA+/Stable across CRISIL and ICRA) funding this expansion without excessive leverage.

• Aerospace is not yet a segment that shows up in the numbers that matter. At ~1.5% of consolidated revenue and not separately reported under Ind AS 108, its growth is difficult for an outside analyst to track with precision.
• The core automotive business had a genuinely bad FY26. A 50% YoY decline in North American Class-8 CV exports and a 38% drop in standalone PAT are not offset, in scale, by aerospace's growth.
• Valuation is stretched against the company's own history. A ~92x trailing P/E is far above Bharat Forge's historical normal-cycle range, and this research found no named sell-side target to cross-check it against.
• New capacity is not yet generating revenue. The Baramati ring mill (H1 CY2027) and new forging capacity (FY2028) mean near-term aerospace growth is capacity-constrained regardless of demand.
• A mixed track record scaling adjacent "new verticals." Past EV-mobility bets (Tork Motors, Tevva Motors) required impairments and, in Tevva's case, ended in insolvency — a relevant caution on execution risk when scaling any new vertical, aerospace included.
• Management's own language describes aerospace as "long gestation" with qualification cycles where "trust compounds over time" — an honest framing that also implies the payoff is not imminent.

• Baramati ring mill commissioning, expected H1 CY2027.
• Automotive export recovery, particularly North American Class-8 CV demand.
• Whether aerospace becomes a separately reported segment as it scales.
• Initiation of named sell-side coverage, which would materially improve external valuation scrutiny.

• Valuation risk (dominant). A ~92x trailing P/E with no located sell-side cross-check is the central risk in this report's own SELL call.
• Automotive cyclicality continuing to weigh on standalone results.
• Execution risk scaling a new vertical, given the company's own mixed record with EV-mobility bets.

FY26 consolidated EBITDA of ~₹2,910cr against an implied EV (market cap + net debt) of ~₹97,447cr gives a current EV/EBITDA of ~33.5x — well above Bharat Forge's normal-cycle historical range. We apply a target EV/EBITDA band that still credits meaningful aerospace/defence optionality without assuming the current multiple is sustained, on an implied share count of ~47.8cr (market cap ÷ CMP):

Even our bull case (28x, still a substantial premium to Bharat Forge's historical multiple, crediting significant future aerospace/defence success) implies material downside from ₹1,945. We round our target to ₹1,270, between the bear and base cases, reflecting genuine uncertainty about how quickly the multiple normalises. No named sell-side target was found to cross-check this against — flag this absence explicitly rather than invent a consensus.

Source: Bharat Forge Integrated Annual Report FY2025-26; CARE Ratings press release (19 Dec 2025); screener.in (11 Sep 2026).