Bharat Forge grows revenue 20.79%, but costs squeeze operating margin
Operating margin recovered 0.47 percentage points sequentially, while higher interest and weaker other income kept year-on-year profit below last year.
Filed 05 Nov 2026, 12:57 IST · Bharat Forge Ltd (BHARATFORG)
Key takeaways
- Consolidated revenue rose 20.79% year on year, but expenses grew faster at 24.08%, cutting operating margin by 2.24 percentage points.
- Quarter-on-quarter operating margin improved 0.47 percentage points to 15.76% as revenue growth of 4.96% outpaced expense growth of 4.37%.
- Net profit fell 6.88% year on year to Rs 278.68 cr, while interest costs rose 21.03% and other income contributed 4.04% of pre-tax profit.
Price around the results
Revenue growth returned, but profit lagged
Bharat Forge reported consolidated revenue growth of 20.79% year on year, while operating profit rose only 5.79%. The gap reflects expenses growing 24.08%, faster than revenue, and pushed operating margin down 2.24 percentage points to 15.76%. Net profit declined 6.88% as interest costs increased 21.03% and depreciation rose 11.98%.
Sequential margin recovery came with a cleaner other-income base
Quarter on quarter, revenue rose 4.96% and expenses increased 4.37%, allowing operating profit to grow 8.20% and margin to improve 0.47 percentage points. Other income moved from negative Rs 312.02 cr in Q1FY27 to Rs 16.89 cr, driving a sharp rebound in pre-tax profit and net profit. The current quarter's other income was only 4.04% of pre-tax profit, so it was not a large contributor to reported profit quality; the sequential tax-rate comparison was also distorted by Q1FY27's 302.25% rate.
Margin remains above the reported peer median
Bharat Forge's 15.76% operating margin was 4.20 percentage points above the 11.56% median for 262 reported Consumer Discretionary peers. However, the margin trend has weakened from 18.00% in Q2FY26 to 17.27% in Q3FY26, 17.19% in Q4FY26, 15.29% in Q1FY27 and 15.76% this quarter. The sequential recovery therefore interrupted, but did not reverse, the decline from last year's level.
Management points to manufacturing growth and overseas review
Management said it maintains expectations of 20-25% FY27 revenue growth for the Indian manufacturing business. The company said it received Bulk Production Clearance for ATAGS, with revenue recognition expected from the beginning of FY28, and described a Rs 2,000+ cr capex programme across automotive, aerospace, defence, data centre and semiconductor components. Management also said the overseas business remains below expectations and that it is conducting a strategic review, while the capex programme is expected by the company to drive growth from FY29 and change the medium-term mix.
The initial stock reaction was within its recent range
The stock was down 3.30% on the results date, underperforming the market by 5.70%, with volume at 4.74 times the reference level. That move was less severe than the recent median absolute post-results move of 4.69%. Bharat Forge's last six recorded reactions were split evenly between three rises and three falls, so the direction was negative but not unusual for the stock.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,870 cr | ₹4,640 cr | +4.96% | +20.79% |
| Other income | ₹17 cr | ₹-312 cr | — | -67.61% |
| Expenses | ₹4,102 cr | ₹3,930 cr | +4.37% | +24.08% |
| Operating profit | ₹768 cr | ₹709 cr | +8.20% | +5.79% |
| Operating margin (%) | 15.76% | 15.29% | — | — |
| Interest | ₹97 cr | ₹90 cr | +8.04% | +21.03% |
| Depreciation | ₹270 cr | ₹263 cr | +2.46% | +11.98% |
| Profit before tax | ₹418 cr | ₹44 cr | +840.32% | -8.53% |
| Tax | ₹139 cr | ₹134 cr | +3.63% | -11.65% |
| Net profit | ₹279 cr | ₹-90 cr | — | -6.88% |
| EPS (₹) | ₹5.77 | ₹-1.88 | — | -7.83% |
Operating margin of 15.76% compares with a Consumer Discretionary sector median of 11.56% across 262 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -3.30% | -5.70% |
Volume on the results session was 4.74× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company maintains expectations of 20-25% revenue growth in FY27 for its Indian manufacturing business.
- ATAGS revenue is expected to be recognized from the beginning of FY28.
- The company expects its capex programme to drive growth from FY29 and shift its medium-term business mix.
Expansion
- The company has a Rs 2,000+ crore capex programme across automotive, aerospace, defence, data centre and semiconductor components.
- The ATAGS manufacturing programme will begin in FY27 after receiving Bulk Production Clearance.
New orders
- The company received Bulk Production Clearance for the ATAGS order.
New initiatives
- The company is conducting a strategic review of its overseas business to determine the best path forward.
Problems & risks
- The company said its overseas business performance remains below expectations.
What to watch
- Whether operating margin holds above 15.76% after the 2.24-percentage-point year-on-year decline.
- Whether Indian manufacturing revenue stays within management's 20-25% FY27 growth expectation.
- Progress on the ATAGS programme ahead of the stated revenue-recognition start from FY28 and the Rs 2,000+ cr capex programme.